Changes Afoot in Goldman’s Mortgage Department

What the heck is going on with Goldman Sachs' (GS-NYSE) mortgage department? There has been quite a bit of turnover the past few months. Is it just business as usual? A ten-year veteran I know recently decamped for greener pastures right about the time Josh Birnbaum left to pursue life after Goldman.

The mortgage desk was credited was sidestepping the subprime slime that wiped out the rest of the Street, and perhaps the traders felt slighted, monetarily, after writing one of the more successful chapters in Goldman's recent history:

December 2007
The subprime-mortgage crisis has been a financial catastrophe for much of Wall Street. But at Goldman Sachs, thanks to a tiny group of traders, it has generated one of the biggest windfalls the securities industry has seen in years.

The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year that ended Nov. 30, according to sources familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. WSJ

Of course, Goldman paid these guys enough to take a sabbatical. But Goldman has seemingly dismantled part of its mortgage team, and is even bringing in an outsider, a rare move for a company known for growing its own; will hiring a Bear Stearns alum sit well with the rank and file at 85 Broad?:

Bear Stearns Cos. mortgage-trading executives Scott Eichel and Jeffrey Verschleiser agreed to take jobs with Royal Bank of Scotland Group Plc and Goldman Sachs Group Inc., according to people with knowledge of their plans.

Eichel, 33, who was co-head of mortgage- and asset-backed bond trading at the time of New York-based Bear Stearns’s near- collapse, will join Greenwich, Connecticut-based RBS Greenwich Capital Markets, said one person, who declined to be named because the announcement hasn’t been released. Verschleiser, 39, will help manage New York-based Goldman’s mortgage department, two other people said....Goldman is adding to its ranks after Dan Sparks, who had run the department, left after 19 years. Josh Birnbaum departed to form a hedge fund. Bloomberg

And while a good trader knows where the bodies are buried, occassionally Goldman’s mortgage traders can even find themselves under water, although something tells me Jason was the last guy on the deal team.

Perhaps it was just time to move on for many of these guys, but the real story will be cloaked in a veil of secrecy, unless Lucas von Praag wants to clear the air.

C’mon Lucas, febrile minds want to know. 

Of course, with the financial markets in disarray, it is possible the Goldman PMD’s merely have PMS, and their cranky mood will likely result in further right-sizing of the organization.
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Bear Stearns Mortgage Traders Leave for Goldman, RBS
Bloomberg

Goldman Loses Hot Shot Trader Josh Birnbaum
1440 Wall Street

How Goldman profited from subprime meltdown
WSJ
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