Lloyd Blankfein and Fabrice Tourre have agreed to appear before a congressional panel to discuss the SEC's (SEC news) charges against Goldman Sachs (NYSE: GS), a media-circus event no doubt. Before the Senate Permanent Subcommittee on Investigations next week, the two Goldman Sachs representatives will aver that they did nothing wrong, according to media reports.

But the grilling will still be uncomfortable. They may be forced to take the fifth on some occasions. It seems that on the crucial issue of whether investors and the CDO portfolio selection manager ACA were informed about the role of John Paulson (John Paulson news), who intended to short the CDO, Tourre might testify that he informed others. Goldman Sachs co-general counsel said as much in a conference call last week.

The firm may have gotten a boost from Paulson & Co. employee Paulo Pellegrini who has told the SEC that he informed ACA that his firm intended to short the issue, as reported by CNBC. But that is not super clear at the moment. My sense is that the two will make a case that the relationship was disclosed. But that will not stop the inevitable grandstanding. The two may win on the facts, but perhaps not the rhetoric. In any case, it will make for interesting theater. 

For more:
- here's a Bloomberg article about the hearing

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