Documents released at a Senate hearing into Goldman Sachs' role in the financial crisis show the firm strategizing on how to bet against its clients' investments.
The revelations came during a chaotic hearing of the Senate Permanent Subcommittee on Investigations, which on Tuesday heard from a number of Goldman executives who denied any wrongdoing in its investments ahead of the financial collapse of 2008.
The hearing featured protesters in jail uniforms calling for the arrest of Goldman executives, and was punctuated by a profanity-laced exchange between a Goldman executive and Sen. Carl Levin (D-MI), who used the term "sh**ty deal" 11 times.
But buried in the day's events was a report from McClatchy news service that former Goldman trader Joshua Birnbaum told his bosses the financial firm could exploit investors' expectations that Goldman is investing in real estate in the long term by betting on a collapse of the housing market in the short term.
Because the "world would think" that Goldman expects a strong real estate market, the company would be able to bet against real estate and win big. “We could use that fear [of a market collapse] to our advantage if we could flip our risk," Birnbaum wrote, as quoted by McClatchy.
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