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

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 17,730.11 -27.80 -0.16%
Nasdaq 5,009.21 -3.91 -0.08%
S&P 500 2,076.78 -0.64 -0.03%
Treasuries 2.39 -0.02 -1.03%
Data as of 3:31am ET
Company Price Change % Change
Bank of America Corp... 17.03 0.00 0.00%
Apple Inc 126.44 0.00 0.00%
Intel Corp 30.56 0.00 0.00%
Micron Technology In... 19.07 0.00 0.00%
General Electric Co 26.78 0.00 0.00%
Data as of Jul 2
Sponsors

Sections

Greece votes Sunday in a crisis referendum that will determine the country's future in the eurozone. The result is too close to call. More

Entrepreneur Guillaume Gauthereau is on a mission to build a 50 to a 100 acre sanctuary in New York to provide refuge to honey bees. More

The most expensive schools in the nation are charging close to $50,000 a year in tuition and fees alone. More