Six Points From Blankfein's Testimony

goldman lloyd blankfein

Goldman released Lloyd Blankfein’s statement ahead of his hearing tomorrow in front of the Senate.

Here are the key points.

  • We and other banks, rating agencies and regulators failed to sound the alarm that there was too much lending and too much leverage in the system — that credit had become too cheap.
  • Goldman supports clearinghouses for eligible derivatives and higher capital requirements for non-standard instruments.
  • April 16, the day the SEC announced the charges against Goldman, “was one of the worst days in my professional life, as I know it was for every person at our firm.”
  • While we strongly disagree with the SEC’s complaint, I also recognise how such a complicated transaction may look to many people. We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky.
  • Our risk management processes did not, and could not, provide absolute clarity; that uncertainty dictated our decision to attempt to reduce the firm’s overall risk.
  • We didn’t have a massive short against the housing market and we certainly did not bet against our clients. (Read our summary of the Goldman emails to see how this is true.)

Click here to read Blankfein’s full statement. And click here to see what else is in store tomorrow.

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