Goldman Sachs boss Lloyd Blankfein has denied his bank contributed to the US financial crisis during a blistering cross examination by a US Senate panel.
With protesters filling the committee room, the CEO of the world’s most powerful investment bank was forced to defend the company’s ethics.
Blankfein, who was accused of fueling the housing crisis and then profiting from it, defended his position.
“We didn’t have a massive short against the housing market and we certainly did not bet against our clients. Rather, we believe that we managed our risk as our shareholders and our regulators expect,” said Blankfein.
The hearing comes less than two weeks after the US Securities and Exchange Commission filed a civil fraud suit against Goldman, charging that it hid vital information from investors about a mortgage-related security.
Professor of Law Elizabeth Nowicki warned of consequences from the Senate investigation.
“Today’s hearings were also damaging for other banks. It’s just a matter of time in my view before private plaintiffs and also the SEC start going after these very sophisticated transactions taking place at a host of other banks at the same time that Goldman was selling its big derivative products.”
The Senate encounter starkly illustrated the current conflict between Washington and Wall Street over blame for the financial crisis. It also highlighted banker resistance to some of the key reforms the Obama administration is trying to push through Congress.