Blankfein: Goldman didn't bet against investors

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Goldman Sachs CEO Lloyd Blankfein will testify Tuesday that his firm didn't mislead investors and didn't bet against the housing market, according to his opening remarks released Monday.

"We didn't have a massive short against the housing market and we certainly did not bet against our clients," Blankfein said in remarks prepared for Tuesday's testimony, which he will give before the Permanent Senate Subcommittee on Investigations.

Goldman Sachs (GS, Fortune 500) is accused by the Securities and Exchange Commission of failing to tell investors that hedge fund Paulson & Co. helped select securities for a portfolio that it was also betting against.

"It was one of the worst days in my professional life," Blankfein said in the testimony about the SEC's charges, made April 16. "If our clients believe that we don't deserve their trust, we cannot survive."

While denying the allegations, Blankfein acknowledged a lack of transparency in derivative markets and the failure of financial institutions to properly warn the public about over-lending and cheap credit at the brink of the economic crisis.

"What we and other banks, rating agencies and regulators failed to do was sound the alarm that there was too much lending and too much leverage in the system -- that credit had become too cheap," he said.

In a push for greater transparency, Blankfein said in his testimony that Goldman supports financial regulatory reform as well as stricter controls for derivatives.

Blankfein also said Goldman Sachs did suffer during the financial crisis, losing $1.2 billion from activities in the residential housing market.

Six other current and former Goldman executives will join Blankfein to testify before the Senate Subcommittee on Tuesday as part of the panel's ongoing investigation into the causes of the recent financial crisis. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 24,580.89 119.19 0.49%
Nasdaq 7,692.82 -20.14 -0.26%
S&P 500 2,754.88 5.12 0.19%
Treasuries 2.90 0.00 0.10%
Data as of 6:52am ET
Company Price Change % Change
Comcast Corp 33.81 1.02 3.11%
Bank of America Corp... 28.99 -0.30 -1.02%
General Electric Co 13.05 0.29 2.27%
AT&T Inc 31.69 0.09 0.28%
Micron Technology In... 57.10 -2.34 -3.94%
Data as of Jun 22
Sponsors

Sections

One of the world's leading smartphone makers is aiming for the biggest stock market listing in nearly two years. More

If Trump puts tariffs on European cars, it would hurt automakers who build a lot of cars in the United States. More

Russian trolls posing as an American college student tweeted about divisive social, political and cultural issues using an account that amassed thousands of followers -- and appeared in dozens of news stories published by major media outlets -- as recently as March. More