REFILE-Goldman’s "Fabulous" Fab’s conflicted love letters

(Refiling to correct last word of 19th paragraph to
“inventor”, not “investor”, as earlier sent)

* Goldman releases Tourre emails ahead of Tuesday hearing

* Tourre brags to girlfriend about selling doomed CDOs

* Tourre also questions ethics of his role in subprime

By Steve Eder and Karey Wutkowski

NEW YORK/WASHINGTON, April 25 (BestGrowthStock) – Fabrice Tourre
and his girlfriend talked like a couple very much in love.

They emailed back and forth about how they wanted to curl
up in each other’s arms and how they looked forward to tender
moments together. Tourre, a Goldman Sachs (GS.N: ) bond trader,
also wrote in the emails of the impending collapse of the
subprime mortgage market and how he was masterminding ways at
Goldman to make money from it.

Little did they know that three years later these very
personal emails written through Tourre’s Goldman Sachs e-mail
account would become part of one of the biggest investigations
into the subsequent financial crisis.

In the email exchanges between Tourre and his girlfriend,
Marine Serres, Tourre comes off as a young, hotshot trader who
foresaw the subprime meltdown while still selling shoddy
subprime-backed products so prolifically he could peddle them
to “widows and orphans.”

But Tourre — the only individual the Securities and
Exchange Commission charged in its fraud case against the firm
— also seems ethically conflicted.

“Anyway, not feeling too guilty about this, the real
purpose of my job is to make capital markets more efficient and
ultimately provide the U.S. consumer with more efficient ways
to leverage and finance himself, so there is a humble, noble
and ethical reason for my job 😉 amazing how good I am in
convincing myself !!!” Tourre said in an e-mail to Serres in
January 2007.

That portion of the e-mail reflecting Tourre’s conflicted
views on his role in the subprime meltdown immediately followed
another part of the e-mail that the SEC released in its
complaint earlier this month.

The SEC’s complaint only included Tourre referring to
himself as “fabulous Fab” and talking about “standing in the
middle of all these complex, highly leveraged, exotic trades he
created without necessarily understanding all of the
implications of those monstrosities!!!”

The SEC left out Tourre’s ethical musings in its
complaint.

Goldman Sachs released the Tourre emails over the weekend
as it readies for its appearance before a Senate panel on
Tuesday. Goldman Sachs Chief Executive Lloyd Blankfein and
Tourre are scheduled to testify, along with other former and
current executives.

The collection of e-mails also show that Tourre was not the
only person at Goldman with confidence the subprime market was
doomed.

Daniel Sparks, a former head of the mortgages department at
Goldman, is also expected to testify on Tuesday before the
Senate Permanent Subcommittee on Investigations.

“According to Sparks, that business is totally dead, and
the poor little subprime borrowers will not last so long!!!”
Tourre wrote in a March 7, 2007, email to his girlfriend.

Tourre — who refers to Serres at one point as a
“super-smart French girl in London” — also tells her about
selling to unwitting investors the type of synthetic
collateralized debt obligation, or CDO, at the center of the
SEC case.

The SEC charges that Tourre and Goldman fraudulently
marketed an “Abacus” CDO by hiding vital information from
investors, including the role that hedge fund Paulson & Co
played in picking mortgage products tied to the CDO. Paulson &
Co betted against the CDO.

“Just made it to the country of your favorite clients
[Belgians]!!! I’m managed (sic) to sell a few abacus bonds to
widow and orphans that I ran into at the airport, apparently
these Belgians adore synthetic abs cdo2,” Tourre wrote in June
2007.

Earlier in 2007, in an e-mail to a friend, Tourre shares
his fears that the product he helped create is crumbling — and
he has a sense of humor about it.

“It’s bizarre I have the sensation of coming each day to
work and re-living the same agony – a little like a bad dream
that repeats itself,” Tourre writes. “In sum, I’m trading a
product which a month ago was worth $100 and which today is
only worth $93 and which on average is losing 25 cents a day
…That doesn’t seem like a lot but when you take into account
that we buy and sell these things that have nominal amounts
that are worth billions, well it adds up to a lot of money.”

He added, “When I think that I had some input into the
creation of this product (which by the way is a product of pure
intellectual masturbation, the type of thing which you invent
telling yourself: “Well, what if we created a “thing”, which
has no purpose, which is absolutely conceptual and highly
theoretical and which nobody knows how to price?”) it sickens
the heart to see it shot down in mid-flight… It’s a little
like Frankenstein turning against his own inventor ;)”

Tourre, 28 when he wrote the emails, reflects on the
strangeness of being so young, yet being in such a critical
role with pressures from those above him at the firm to make
money.

“… I am now considered a “dinosaur” in this business (at
my firm the average longevity of an employee is about 2-3
years!!!) people ask me about career advice. I feel like I’m
losing my mind and I’m only 28!!! OK, I’ve decided two more
years of work and I’m retiring.”

Penny Stocks

(Reporting by Steve Eder in New York and Karey Wutkowski in
Washington; Editing by Bernard Orr)

REFILE-Goldman’s “Fabulous” Fab’s conflicted love letters