Goldman’s Blankfein refutes charges in Senate testimony
28 Apr 2010
Goldman Sachs chief executive Lloyd Blankfein categorically denied that his investment bank made massive ''short,'' or negative, bets on subprime mortgage securities.
At a testimony session stretching more than 10 hours before the Senate Permanent Subcommittee on Investigations in Washington yesterday, Blankfein said Goldman had no obligation to divulge its short bets in its role as a market maker for sophisticated institutional investors.
''We do hundreds of thousands, if not millions of transactions a day, as a market maker,'' he said, noting that behind every transaction there was a buyer and a seller, creating both winners and losers.
''The investors we're dealing with…know what they want to acquire,'' Blankfein said. If they raise questions about a deal, he said, ''then the salesman owes them an honest answer.''
Blankfein also defended the idea of betting against the housing market, comparing it to betting against the corn market.
''It's perfectly socially acceptible,'' Blankfein said. ''Any futures contract on oil or any futures market, you could characterise it as a bet.''
