Political Theater

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There is a reason Congressional hearings are relegated to C-SPAN: they can be soul-crushingly boring. There’s only so long one can watch rich people berate richer people for being greedy. The Goldman hearing has conformed to a familiar pattern. Senators begin with pointed questions and descend into demagoguery; the bankers force stoic stares, and then, when they’re forced to speak, essentially try to eat up clock until it’s time to repeat the excercise.

Three of the four witnesses on this first panel — Daniel Sparks, Michael Swenson and Josh Birnbaum — supplied aggressively bland opening statements. The notable exception was Fabrice Tourre, a.k.a. the Fabulous Fab, the lone Goldman employee accused of fraud. In a strident denial, Tourre confronted the charges head on, relying heavily on the Big Boy Defense—that is, the firms who got soaked in the Abacus deal were among the world’s most sophisticated investors, making bets that scores of other smart people made, and it’s not our job to coddle or second-guess them. “I deny – categorically – the SEC allegation,” he said. The specificity of Tourre’s opening remarks – compared to his colleagues, at least – seemed to demonstrate confidence in his case.

From there, though, the hearing has been reduced to basic theatrics. The panel transformed themselves into dense, uncomprehending cogs in the Goldman machine, relying on a variety of time-sucking techniques to skirt even the simplest questions. Frustrated by their stalling tactics, the committee members have grown increasingly incensed. Sen. Carl Levin, who as committee chair was the first to grill the panel, worked himself into a lather questioning Sparks about a subprime deal called Timberwolf, swearing liberally in reference to a Goldman internal email. As the panel played dumb through her allotted 20 minutes, Sen. Susan Collins, filling in for Oklahoma Sen. Tom Coburn as the subcomittee’s ranking minority member, turned to Levin and sighed, “I cannot help but get the feeling that the strategy of the witnesses is to burn through the time of each questioner.” Levin certainly noticed, and assured his colleagues, “We’re going to stay here as long as it takes to get the answers.”

But they’re not really getting any. It took three hours for the Senators to get Sparks to say Goldman, in its market-making capacity, was not obligated to disclose its own position to investors–a contention Goldman has already publicly stated. The committee members have taken turns browbeating the witnesses for willfully ignoring their questions, and even those who seemed determined to adopt a gentler tone – like Sen. Coburn, who asked Tourre how he felt when his love letters were released, and assured the embattled trader he wasn’t making judgments – have grown frustrated with their dodges. So far, the witnesses have been able to endure the haranguing. For what it’s worth, Goldman stock is up slightly ($1.85, or a little more than 1%) as of this posting.

More to come.

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