Was Fabrice Tourre Cheating On His Girlfriend? Are CDOs Really Nothing More Than "Intellectual Masturbation"?

Zero Hedge is currently going through the 100 or so pages of just released Goldman emails that disclose in excruciating detail the events from late 2006 to late 2007 occurring in Goldman's mortgage trading business. We will have a lot more to say on this tomorrow, suffice to say that we were pleasantly surprised that C-BASS, which we uncovered recently may be implicated in the Goldman SEC fraud scandal, is again involved. We also feel bad for Harvard and MS Prop, and a little better for Hayman Capital. Stay tuned. In the meantime, we will take a brief detour into the financial yellow pages, as we focus on the curious case of Fabrice Tourre, who once again plays a prominent role in today's email discovery. The first thing that caught our attention is the original "Fab Fab" email, finally reproduced in its entirety. One tangent that may be relevant to gleaning some more insight into the character of the "fabulous" 27 year-old mortgage god, is that at the time he penned his email to girlfriend (#1), then Goldman co-worker, Marine Serres, he was likely also with girlfriend (#2) Fatiha Bouktouche, a Columbia University post Doc, to whom he may have been disclosing proprietary Goldman holdings and trades. Who knows to whom, when or how Fatiha may have leaked insider trades whispered to her by Fabrice, and who knows what CDO trades Marine was pitching to the retarded (and soon to be bankrupt) European banks gobbling up everything Goldman would sell them, structured and originated by her boyfriend.

We recreate the original email:

From:       Fabrice Tourre
Sent:       Tuesday, January 23, 2007 11:34 PM
To:          Marine Serres
Subject:   Fw: ft--friday

Darling you should take a look at this article... Very insightful...More and more leverage in the system, l'edifice entier riqsue de s'effondrer  a tout moment.... Seul survivant potentiel, the fabulous Fab (as Mitch would kindly call me, even though there is nothing fabulous abt me, just kindness, altruism and deep love for some gorgeous and super smart French girl in London), standing in the middle of all these complex, highly levered exotic trades he created without necessarily understanding all the implications of these monstruosities !!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer will 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 !!!

Sweetheart, I am now going to try to get away from ABX and other ethical questions, and immediately plunge into Freakonomics... I feel blessed to be with you, to be able to learn and share special things with you, I love when you advise me on books I should be reading. I feel like we share a lot of things in common, a lot of values, topics we are interested in and intrigued by... I just love you !!!

Your chtit Fab

The first thing to note here is the biographical details on Ms. Serres. Curiously, a generic google search reveals that her LinkedIn profile has been deleted promptly and very recently. Too bad once something hits the Interwebs it never disappears. Which is why we recreate the cached version of the page which Ms. Serres decided to take down in a hurry.

It may be interesting to get some insight into just who Ms. Serres was selling "Structured Products" and just what "over the Wall" information she may have been privy too. We know that there is something in Ms. Serres bio that prompted her to take down her LinkedIn page immediately. We would like to find out what it is. It would not be far fetched to imagine that Ms. Serres was instrumental in selling CDOs and other structured products to Goldman's European clients. Surely, this such a blatant and very much illegal practice demands at least another Congressional investigation. Congress - get right on it. As a reminder, Gail Kreitman, whose testimony was critical in the SEC case against Goldman, and who mysteriously departed Goldman in June 2009 was also a structured products salesman at Goldman (Gail's husband was a founder of subprime "specialist" C-BASS, which lilquidited and subsequently was acquired by Goldman Sachs for pennies on the dollar). According to the FSA database, Marine Charlotte Alexandra Serres left Goldman on October 31, 2007.

To be sure Marine felt the same way the Fab said he felt about her:

From:        Serres, Marine
Sent:        Wednesday, March 07, 2007 6:43 AM
To:           Tourre, Fabrice
Subject:    RE: Diner

And right now, I'd love nothing more than just curl in your arms, feel the warmth of your skin and just stay there smiling for hours (with occasional - frequent - tender kisses... ;)

Reveille toi doucement mon amour...

Ta chtite puce

What is interesting in the email discovery is that there was another woman in the life of "kind and altruistic" Fab Fab: then Columbia University Post Doc Fatiha Bouhktouche.

In an email Fabrice sent out on January 29, less than a week after the critical January 23 email sent to Marine (see above), he writes:

Yep, work is still as laborious, 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... 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.

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 ;) Anyway I don't want to bore you with my stories, I'm going to look in the yellow pages for the phone number of the ABX market and I'll send it to you, because I believe that a soft and sensual feminine intervention is necessary for Fab's survival


Fab (In string, which is rather free)

To which Fatiha, presumably unaware of Marine's existence in far away London replies:

j'aurais bien aime t'aider...mais j'ai cherche les coordonnees sur les yellowpages et j'ai pas trouve...A defaut des marches, je pourrai aussi essayer d'intervenir aupres de toi de facon douce et sensuelle... ;') Just ler me know si ca peut t'aider!!! bizzzzzzzzzoux

Even non-French speaking readers can figure out the gist. We are far from making moral judgments on Fab's love life, who a mere 6 days earlier pledges himself as full of "kindness, altruism and love" for another woman, although has no problems to carry on a parallel existence filled with "bizzzzzous" and more than one "intervention feminine douce et sensuelle." However, the question of just how much confidential information about Goldman's prop trading positions the seemingly endlessly boastful Fab was disclosing to his at least 2 girlfriends deserves additional probing. And while we are certain that a certain Columbia post-doc did not have access to trading ABX, IG, CDO2 or any other "intellectual masturbation" product which only Goldman can specialize in, who knows who else may have benefited from Fatiha's information conduit.

We are confident that the hearing on Tuesday will cover none of these moderately relevant issues, and instead will be based on soundbites from Congressional staffers who are pounding the populist drum without having a grasp of the big picture, in hopes of taking advantage of the Goldman scapegoating campaign to boost declining ratings.

We will have more to say about the full email discovery tomorrow, as there are some other much more relevant disclosures, some very critical about just how Goldman takes advantage of its market monopolistic position to push the market in any way it wants.