Carl Levin’s legacy

Rather than be remembered as “the master of the modern congressional investigation” as Jeff Robbins suggests, Sen. Carl Levin may instead be remembered as the chair of a Senate Finance committee who had little to no understanding of finance. He repeatedly pressed Goldman Sachs CEO Lloyd Blankfein in 2010 over his firm’s role in the mortgage securities business, fully expecting to frame Blankfein as a villain. When Blankfein calmly and deliberately tried to answer Levin’s questions about the creation and sale of mortgage-backed securities for his firm’s clients, the senator’s head almost exploded when he was informed that Goldman often takes the other side of the trade.

Apparently, no one on Levin’s staff gave him the short course on the role and responsibility of market makers in capital markets, nor did they explain to him that the Goldman’s clients specifically asked for the type of risk exposure that these mortgage-backed securities gave them. No one told Levin that the clients were fully aware of Goldman’s multiple roles in packaging these securities. Robbins gleefully points out that Goldman executives were visibly miserable when under fire from Levin’s committee. But that was fully to do with the fact that they had roughly 20 seconds or less to explain to the chair of the powerful congressional finance committee how modern finance worked, something they had not been expecting.

— Sean F. Flaherty, Charlestown