Goldman CEO says has board’s support: report

NEW YORK (BestGrowthStock) – Goldman Sachs Group Inc Chief Executive Lloyd Blankfein told CNBC on Tuesday he retains the support of the board as well as support from clients since the SEC accused the powerful but embattled bank of fraud earlier this month.

Blankfein, after testifying for more than three hours before the U.S. Senate’s permanent investigations subcommittee, maintained his stance that Goldman did nothing wrong when it sold an exotic mortgage derivative — the Abacus CDO — that cost its buyers $1 billion when housing prices slumped.

“Synthetic CDOs allowed buyers and sellers to be able to take the kind of positions they wanted in the housing market. It wasn’t a casino,” he said in the interview. “These were highly sophisticated parties, some of the most sophisticated in the world.”

Blankfein defended the idea of synthetic CDOs — or derivatives built on credit derivatives — saying they let investors diversify or hedge their exposure to housing markets efficiently and quickly.

“These were professional investors who sought the risk and attained they risk they wanted in the market,” he said.

With regard to trading customers, Goldman fulfilled its duties as a middle man.

“When you are a market maker you have responsibility to make sure your client is suitable, is knowledgeable and that what you’re providing serve the purpose and is provides the risk that the client wants.”

He was more contrite when it came to the broader economy, where businesses and individuals have suffered from the housing slump and the ensuing recession. Wall Street banks, including Goldman, have been blamed for exacerbating the crisis by creating exotic mortgage securities, enabling some poor underwriting and then shorting the housing market.

Blankfein said Goldman does bear some responsibility for the financial crisis of 2007 and 2008.

“I think that financial institutions let the public down and we are a very important, influential financial institution, and so we bear our share.”

Stock Market Research

(Reporting by Joseph A. Giannone; Editing by Lincoln Feast)

Goldman CEO says has board’s support: report