Much of the insta-commentary on the congressional hearings yesterday suggested that they were pretty much a wash for Goldman Sachs (legally, not PR-wise).

But The Wall Street Journal went the other way this morning with a smart story on the legal implications raised by Fabulous Fab Tourre’s testimony, as well as by some documents revealed yesterday. It finds they’re not so good for Goldman (an Audit funder):

For example, Goldman has said that investors in such transactions created by the firm were “sophisticated,” a word Mr. Tourre repeated in his testimony.

During the hearing, though, Sen. Susan Collins (R., Maine) referred to an email sent by Mr. Tourre that discussed a list of buyers for a potential mortgage-related investment that “should include fewer sophisticated hedge funds.”

“This sounds like a deliberate attempt to sell your products to less-sophisticated clients,” she said. Mr. Tourre responded that the comment reflected his view of hedge funds, which “have a tendency to argue … very, very much about prices.”

Uh huh.

And this backs up the Journal’s own good reporting, as well as that of The New York Times, from last week:

One of Mr. Tourre’s answers on Tuesday could weaken a key Goldman response to the SEC claims—that Goldman had no incentive to structure the deal so it would fail. Goldman has said it was an investor in the deal and lost $90 million when the deal lost value. But Mr. Tourre told the senators that Goldman tried early on to sell its investment, and couldn’t find a buyer.

It seems to me that Laura Schwartz is the linchpin to the case She’s the ACA executive on whom it seems a good chunk of the SEC’s case against Goldman hinges. The WSJ got a hold of her last week, but:

Ms. Schwartz, reached on her cellphone, didn’t stay on the line. She no longer works for ACA. A representative for ACA Financial didn’t comment.

The WSJ doesn’t have subpoena power. But Carl Levin does.

Meantime, Francine McKenna of re: The Auditors raises a good point today in a column at Going Concern. She points to an exchange between Delaware Democratic Senator Ted Kaufman, who’s been the most-persuasive legislative critic of Wall Street lately (alas, he’s a lame duck), and Goldman Chief Financial Officer David Viniar.

Kaufman is trying to pin Viniar down here and does—which is somewhat miraculous if you saw all the slithering going on at the hearings yesterday (emphasis mine):

Senator Kaufman: You can say under oath that GS never engaged in transactions near quarter end to improve their balance sheet?

CFO Viniar: We never engaged in Repo 105 type transactions. Anything we did at quarter end, if we took something off our balance sheet it’s because we sold things.

Senator Kaufman: Did you do transactions where you sold things then bought back after the quarter end or bought then sold them again after quarter end?

CFO Viniar: Everything was disclosed…

Senator Kaufman: You never moved things on or off the balance sheet to dress up the balance sheet?

CFO Viniar: No.

Which is a good time to bring up this Wall Street Journal story from a couple of weeks ago, which I wrote then showed that Lehman’s now-infamous Repo 105 was just the beginning.

A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.

Now this alone doesn’t prove anything on Goldman. First the numbers mentioned are an average of eighteen banks and it may not have done such things at all. Second, Viniar may have been explicitly correct when he says Goldman didn’t shuffle specific assets off and then back on around quarter’s end.
But it’s sure worth exploring.

Finally, The New York Times disappoints by putting a “political memo” as its Goldman representative on page one, writing that “For Democrats, Bankers Make a Handy Foil.” Well, no kiddin’. Important though that may be for the prospects of financial-reform, it’s hardly a novel take and already feels dated.

Surely the news of the hearings themselves was big enough to be worthy of a front-page slot, while the horse-race analysis could have played the supporting role.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.