NEW YORK (Reuters) - Brass-knuckle sales tactics, worthless assets and clueless investors: the vignettes that emerge from hundreds of pages of three-year-old emails from members of Goldman Sachs Group’s (GS.N) mortgage securities trading desk would not be out of place in a David Mamet play.
In “Glengarry Glen Ross,” Mamet depicted the aggressive and desperate sales tactics employed by a group of salesmen to push worthless Florida real estate on unsuspecting buyers. The play helped popularize that age-old mantra of salesmen everywhere: “ABC or Always be Closing.”
And while there may be no memorable catchphrase in the Goldman emails released this week by a U.S. Senate panel probing the firm, there is some similarity in tenor and tone of the bank’s drive to unload subprime mortgage-linked securities in spring 2007.
Sprinkled throughout the 900-page document dump by the Senate panel are emails in which Goldman executives applaud underlings for their “success in grinding out retained positions” and doing an “excellent job pushing to closure these deals in a period of extreme difficulty.”
And the emails introduce us to a new sales star at Goldman named Cactus Raazi, who wins heaps of praise from his colleagues for moving subprime-backed debt.
The picture that emerges from the many emails is one of a Goldman sales force working under the gun to sell securities, as the window on the market for collateralized debt obligations is rapidly closing.
A salesman in South Korea is encouraged to get a group of investors to buy more mortgage-backed securities with email messages like “Get ‘er done” and “Yes - go for it.”
From the collection of emails, it is clear that in the waning days of the U.S. housing bubble, one of the main missions of Goldman’s structured products sales force was to find institutional buyers for the last round of CDOs Goldman was bringing to market.
Goldman needed not only to unload some of its inventory of mortgage-backed securities, but take steps to set up short positions against some of those very same securities.
Former Goldman mortgage executive Daniel Sparks gave those marching orders in a February 27, 2007, email, in which he directed his crew “to reduce CDO pipeline risk,” “cover more single name shorts” and “allocate short positions more explicitly.”
Sparks’ email may not be as direct or as profane as the “always be closing” speech delivered by Alec Baldwin’s character Blake in the movie version of “Glengarry Glen Ross,” but it gets the point across.
If nothing else, the investigations and allegations now engulfing Goldman’s mortgage-backed securities operation have opened a window into a side of the investment firm that is rarely seen in public. Once-private emails are revealing some of the more colorful and intriguing characters the firm relies on to sell its more esoteric and complex products.
The lawsuit filed by the U.S. Securities and Exchange Commission, for instance, brought a level of fame to Goldman bond salesman Fabrice Tourre, whom regulators claim misled institutional investors about a subprime mortgage-linked deal called Abacus 2007-AC1.
But the 31-year-old, French-born Goldman vice president may be just as well-known for the love notes he sent his girlfriend, including one email in which he boastfully referred to himself as “Fabulous Fab.”
Now Raazi, another Goldman fixed-income salesman and vice president, is receiving his 15 minutes of unwanted fame, thanks to emails released by the Senate panel, which held a marathon 11-hour hearing on Tuesday on Goldman’s role in the subprime mortgage mess.
Raazi, whose full name is Mehra Cactus Raazi, has been a Goldman bond salesman since 1998. Before coming to Goldman he was an ad salesman for “Rolling Stone” magazine and other Wenner Media publications. A 1997 story in The Los Angeles Times listed an “M. Cactus Raazi” as the business manager for “URB” magazine.
If there is any champion for the Goldman side of things in the mass of emails, it is Raazi, who is singled out for his selling prowess a number of times.
Most notable is an email sent by Goldman mortgage executive Tom Montag, now with Bank of America (BAC.N), to Goldman Chief Executive Lloyd Blankfein on March 14, 2007, with the subject line “Cactus Delivers.” Montag praises Raazi for helping Goldman cover “another $1.2 billion in shorts in mortgages.”
The email thread praising Raazi begins with Sparks writing to Montag and telling him “Cactus Raazi did a fantastic job for the desk.” Sparks added, “Please recognize Cactus when you get a chance.”
Two weeks later, Raazi’s feats of selling are lauded again in a memo sent around to the entire “GS Syndicate” for CDOs and other mortgage-backed securities. That memo begins: “Great job Cactus Raazi trading us out of our entire Timberwolf Single-A Position—$16 mm.”
Timberwolf is a $1 billion hybrid CDO Goldman brought to market in March 2007 and which quickly lost all of its value. The CDO liquidated in June 2008.
With the CDO market long dead, it is not clear what Raazi is selling now for Goldman. He did not return an email seeking comment. A Goldman spokesman also declined to comment.
Reported by Matthew Goldstein, editing by Matthew Lewis