Tom Montag, the guy who wrote that Goldman memo, now works at BofA

Charlotte ObserverMay 9, 2010 

CHARLOTTE, N.C. — Sprinkled throughout 910 pages of documents released by a Senate committee probing Goldman Sachs is the name of an executive who has become a big player at Bank of America Corp.: Tom Montag.

The New York-based executive has steadily gained power at the Charlotte bank since arriving in the 2009 Merrill Lynch & Co. acquisition. Montag, who worked at Goldman before Merrill, now runs Bank of America's highly profitable global banking and markets unit.

In 2009, he was also Bank of America's highest-paid top executive. He made $29.9 million in total compensation, mostly from a $20 million stock grant that was guaranteed under his Merrill contract.

Montag's name came up during a congressional hearing last month, but he doesn't appear to be suffering any ill effects from the publicity. Bank of America declined to comment on his Goldman past.

New York-based Goldman Sachs Group Inc., once seen as one of the stronger banks emerging from the nation's financial crisis, has come under fire from regulators and lawmakers in recent weeks for its role in the country's mortgage meltdown.

The Securities and Exchange Commission last month charged the company and an executive with civil fraud for allegedly misleading investors about a complex mortgage-backed investment known as a collateralized debt obligation, or CDO. The company and the executive have vigorously denied the allegations.

Later in the month, the Permanent Subcommittee on Investigations, led by Sen. Carl Levin, D-Mich., alleged Goldman made money betting the housing market would decline while it was selling mortgage-backed securities to clients. The investment bank has said it did not have a big "bet" against the market and that it acted appropriately.

As part of its investigation, the subcommittee released a trove of company e-mails and other documents. Among these materials, Montag's name appears 105 times, mostly in Goldman e-mails. In the e-mail that has gained the most attention, he uses an expletive to describe a poor-performing investment underwritten by the firm.

The $1 billion CDO known as Timberwolf I was sold to investors in the first quarter of 2007 and lost 80 percent of its value in the first five months, according to the committee. It was liquidated in 2008. "Boy that (Timberwolf) was one s----- deal," Montag says in the June 2007 exchange with Goldman's former mortgage head.

A person familiar with Montag's thinking said he made the comment because the deal was a money-loser for Goldman. The person also noted that the remarks were made months after the CDO was first issued.

In a hearing on April 27, Levin brought up the e-mail in his questioning of the former Goldman mortgage head, Daniel Sparks. Levin wondered why the firm would sell such an investment. Sparks told Levin he believed Montag's e-mail referred to the mortgage head's own performance, not the CDO, according to Bloomberg News.

Montag, 53, spent 22 years at Goldman, rising to co-head of the global securities business. He left the firm at the end of 2007 and was recruited to Merrill in April 2008 by CEO John Thain, a Goldman alum.

At Merrill, Montag was head of global sales and trading. As markets reeled, that part of the company ballooned losses in the fourth-quarter of 2008, after Bank of America had already agreed to buy Merrill but before the deal had closed. That led to Bank of America's need for extra government aid and the ouster of Thain, who had taken a top job at the combined company.

Read the full story at CharlotteObserver.com

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