By Jay Heflin - 04/27/10 03:05 PM EDT
In testimony before the Senate Investigations Committee, former Goldman Sachs executive Joshua Birnbaum said he was never instructed by his bosses to shift his investment strategy so the bank could reap billions in betting against the success of mortgage-backed securities.
"No one from senior management told me to make a directional bet against the subprime market," he said. "Rather, during the 2006-2007 period, regardless of whether our books were long or short, the consistent theme from management was to reduce risk in our books."
Birnbaum's remarks strikes at the heart of an argument posed by Sen. Carl Levin (D-Mich.), who believes the bank took a directional shift in investment strategy to profit from the mortgage fallout.
Levin will likely address Birmbaum's comment during the question-and-answer section of the hearing.