Lord Blankfein Defends Goldman Sachs Against Breakup Advocates

Discussion in 'Wall St. News' started by ByLoSellHi, Nov 10, 2009.

  1. Blankfein Defends Goldman Sachs Against Breakup Advocates
    Email | Print | A A A

    By Christine Harper

    All smiles for Lord Blankfein as Goldman Sachs obtains the benefit of being able to borrow money near zero interest rates (a policy crafted by the FOMC that punishes U.S. savers), and use that money in precisely the same fashion as before the financial collapse in 2007.

    Nov. 10 (Bloomberg) -- Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said his bank, the nation’s fifth largest, is easier to manage than its bigger rivals, defending the company against regulators and lawmakers who want to break up the top U.S. lenders.

    “Our business is very complex, and I won’t deny that, but it’s far, far simpler than most of the competitors,” Blankfein, 55, said today at a conference in New York sponsored by Bank of America Corp. “I wonder myself how some of these things get managed.”

    Politicians and regulators are debating whether last year’s credit crisis and government bailouts showed that some finance companies had become so big that their failure would put the entire economy at risk. The Obama administration wants to boost the Federal Reserve’s ability to set stricter capital and liquidity standards to reduce that threat, while lawmakers including Bernie Sanders, a Vermont independent, have proposed limiting the size of banks.

    Simon Johnson, a professor at the Massachusetts Institute of Technology in Cambridge, said in a Bloomberg radio interview today that Goldman Sachs’s assets nearly quadrupled over the last decade. “What have we gained from a societal perspective from Goldman Sachs becoming four times bigger? Nothing,” said Johnson, a former chief economist for the International Monetary Fund. “Break Goldman Sachs up into four pieces, let them choose how they break up.”

    Investment Banking

    Goldman Sachs, the most profitable securities firm in Wall Street history, has adhered to an investment-banking business model focused on advising, financing and investing even though it converted to a bank-holding company last year, Blankfein said.

    “Most of the activities we do, and you can be confused if you read the pop press, serve a real purpose,” Blankfein said. “It wouldn’t be better for the world or the financial system” to change the firm’s activities, he said.

    Goldman Sachs employed 31,700 at the end of September, compared with 281,863 at Bank of America Corp., the largest U.S. bank, and 220,861 at JPMorgan Chase & Co., the second-largest.

    “We pretty much stuck to our investment-banking knitting,” Blankfein said. “That’s why we have 30,000 people and many of our competitors have well over 200,000 or 300,000 people.”

    Blankfein said that the New York-based firm’s change to a bank under the supervision of the Federal Reserve means that “there are dozens of people who work for the New York Fed who come to work in our offices every day” to provide a check on the company’s businesses. He said regulatory changes haven’t altered any of those activities, such as principal investing or commodity trading, that the firm engages in.

    “We haven’t suffered from people saying, ‘Don’t do this,’” he said.

    To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
    Last Updated: November 10, 2009 11:13 EST
  2. He prefers to be addressed as "Lord God Blankfein". :cool: