He hasn’t been ready to talk about it until now but yes, you should know, April 16th was the day Lloyd saw Viniar for the first time in the new steam room during an AM soak. All innocence lost. Not even the on-site cupcakes could console him. And the day got only worse. Here’s what he has to say about that.
Chairman Levin, Ranking Member Coburn and Members of the Subcommittee:
Thank you for the invitation to appear before you today as you examine some of the causes and consequences of the financial crisis.
Today, the financial system is still fragile but it is largely stable. This stability is a result of decisive and necessary government action during the fall of 2008. Like other financial institutions, Goldman Sachs received an investment from the government as a part of its various efforts to fortify our markets and the economy during a very difficult time.
I want to express my gratitude and the gratitude of our entire firm. We held the government’s investment for approximately eight months and repaid it in full along with a 23% annualized return for taxpayers.
Until recently, most Americans had never heard of Goldman Sachs or weren’t sure what it did. We don’t have banking branches. We provide very few mortgages and don’t issue credit cards or loans to consumers. Instead, we generally work with companies, governments, pension funds, mutual funds and other investing institutions. These clients usually come to Goldman Sachs for one or more of the following reasons: (1) they want financial advice; (2) they need financing; (3) they want to buy or sell a stock, bond or other financial instrument; or (4) they want help in managing and growing their financial assets.
The 35,000 people who work at Goldman Sachs, the majority of whom work in the United States, are hard-working, diligent and thoughtful. Through them, we help governments raise capital to fund schools and roads. We advise companies and provide them funds to invest in their growth. We work with pension funds, labor unions and university endowments to help build and secure their assets for generations to come. And, we connect buyers and sellers in the securities markets, contributing to the liquidity and vitality of our financial system.
These functions are important to economic growth and job creation. I recognize, however, that many Americans are skeptical about the contribution of investment banking to our economy and understandably angry about how Wall Street contributed to the financial crisis. As a firm, we are trying to deal with the implications of the crisis for ourselves and for the system. 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. One consequence of the growth of the housing market was that instruments that pooled mortgages and their risk became overly complex. That complexity and the fact that some instruments couldn’t be easily bought or sold compounded the effects of the crisis.
While derivatives are an important tool to help companies and financial institutions manage their risk, we need more transparency for the public and regulators as well as safeguards in the system for their use. That is why Goldman Sachs, in supporting financial regulatory reform, has made it clear that it supports clearinghouses for eligible derivatives and higher capital requirements for non-standard instruments.
As you know, ten days ago, the SEC announced a civil action against Goldman Sachs in connection with a specific transaction. It was one of the worst days in my professional life, as I know it was for every person at our firm. We believe deeply in a culture that prizes teamwork, depends on honesty and rewards saying no as much as saying yes. We have been a client centered firm for 140 years and if our clients believe that we don’t deserve their trust, we cannot survive.
While we strongly disagree with the SEC’s complaint, I also recognize how such a complicated transaction may look to many people. To them, it is confirmation of how out of control they believe Wall Street has become, no matter how sophisticated the parties or what disclosures were made. We have to do a better job of striking the balance between what an informed client believes is important to his or her investing goals and what the public believes is overly complex and risky.
Finally, Mr. Chairman, the Subcommittee is focused on the more specific issues revolving around the mortgage securitization market. I think it is important to consider these issues in the context of risk management. We believe that strong, conservative risk management is fundamental and helps define Goldman Sachs. Our risk management processes did not, and could not, provide absolute clarity; they highlighted uncertainty about evolving conditions in the housing market. That uncertainty dictated our decision to attempt to reduce the firm’s overall risk.
Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is we were not consistently or significantly net “short the market” in residential mortgage-related products in 2007 and 2008. Our performance in our residential mortgage-related business confirms this.
During the two years of the financial crisis, while profitable overall, Goldman Sachs lost approximately $1.2 billion from our activities in the residential housing market.
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 would expect.
Mr. Chairman, thank you for the opportunity to address these issues. I look forward to your questions.
And Mr Levin and the rest of this Committee , I will leave now because I have god’s work to perform and if you don’t let me leave immediately I will visit upon you 10 plaques worse than the plagues visited upon the Egyptians .
Those plagues will begin with …..
This committee owes my client an apology senator.
“It was one of the worst days in my professional life so far”
-fify
Can we please hear something about any of the other firms that aren’t GS? Five out of nine of the stories you’ve posted today are about GS. We get it.
@4 no, I don’t think you do.
mr. blankfein, while you think your 23% “annualized” return is acceptable; I would remind you that the obama portfolio is up some 65%. once again, you have fleeced the american taxpayer* of their hard earned dollars.
-m. waters
*see what I did there (that’s only 53% of us)
In other news:
http://www.nypost.com/p/news/local/manhattan/jeff_greenfield_and_eliot_spitzer_5UWZVpB8ALvhoQ4shFO2dI?CMP=OTC-rss&FEEDNAME=
You’ll find, Lloyd– if I may be so forward as to address you as such– that the 16th won’t be as professionally bad as the day your a$$ gets shit-canned by the board, which will be soon.
Please Mr. Blankfein when you go before the congress Tuesday….tell the trurh please…please. The country called USA is tired of listening to all the bullshit as we have in the past. Oh……bring a change of underwear.
“Until recently, most Americans had never heard of Goldman Sachs or weren’t sure what it did. We don’t have banking branches. We provide very few mortgages and don’t issue credit cards or loans to consumers. Instead, we generally work with companies, governments, pension funds, mutual funds and other investing institutions”
In other words: F*ck you, leave us the f*ck alone and stay away from our golden scrotes.
Reading this site daily…I know a lot of you dislike Charlie Gasparino……OK……but, if you are one who has a headache at the end of the trading day, as I have numberous times, LISTEN….to Charlie……Listen to FOX. In your area…..FoxBusinessnews.com/channelfinder. Do it….you’ll like it.
So if this was Mr. Lloyd’s worst day ever, and he is doing God’s work, then this is the worst day ever for God’s work?
Now I feel bad. Let’s just leave them alone, so they can keep a-doin work for the Lloyd…er…the Lord.
Yes – GS will work much harder to shank their clients even worse than before.
Bess, your daddy’s a meanie. Make him stop.
“I look forward to your questions.” um, like you look forward to a colonoscopy.
“During the two years of the financial crisis, while profitable overall, Goldman Sachs lost approximately $1.2 billion from our activities in the residential housing market.”
But how much did you win?
“One e-mail from Blankfein asks his employees “are we doing enough right now to sell off cats and dogs”?
An e-mail from a mortgage trader named Fabrice Tourre urges his colleagues not to approach “sophisticated” hedge funds about selling them mortgage investments because “they know exactly how things work.” Rather, Tourre suggested that Goldman approach “buy-and-hold ratings-based buyers” who might not do as much research into the investment.”
Tourre is toast.
Bess, spank me, just don’t make me feel bad about it.
u know who
@11 = CG
This guy looks like Yoda from Star Wars!
@17. Let’s say you’re selling a car for your neighbor. You come across a potential buyer who asks for the maintenance history of the car, wants to bring it to a mechanic for a check-up, and lifts the hood up and actually seems to know what he’s doing. Then, you meet another buyer who say, “hey, it’s blue. I like that.” The latter offers you better terms than the former. Who do you sell the car to?
Mr. Blankfein, it is your time to retire.
Goldman Sachs Shorts Goldman Stock, Offsets Losses
http://wp.me/pIP1s-4q