Goldman Sachs CEO Lloyd Blankfein says the bailout of his firm by U.S. taxpayers was an "embarrassing situation," telling a panel of U.S. senators that, "clearly, the world needs more regulation."
Blankfein was answering questions posed by me (the only Senate Democrat to vote against both the 2008 bailouts of Wall Street and the U.S. auto industry.)
I pushed Blankfein during Tuesday's Capitol Hill hearing examining Goldman's fraud charges and its role in the collapse of the U.S. financial industry in 2008.
Video excerpts of his exchange with Lloyd Blankfein:The brief video is available online at Tester's official YouTube channel:
Here's the transcript:
U.S. SENATOR JON TESTER: Do you, on behalf of Goldman, accept any responsibility for the collapse of 2008?
LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: Yes.
TESTER: Are you in any way embarrassed that the U.S. taxpayer had to bail out Goldman?
BLANKFEIN: We were--we got funds from the government and it's an embarrassing situation then and it's embarrassing, um, uh, now.
TESTER: Do you think that those funds were critically important as to you being able to stay in business?
BLANKFEIN: I think they were critically important. I don't know what--you know, I can't say what would have happened otherwise. But they were critically important to the system therefore critically important to us.
TESTER: Do you feel you own anything to the taxpayers because of that bailout?
BLANKFEIN: I think, yes, and, we owe, we live in the good, you know, yes, and for many other reasons.
TESTER: I can tell you that there are some things in my job as a U.S. Senator from Montana that don't make a lot of sense. One of the things that doesn't make a lot of sense to me is why these synthetic--and I know you've got an answer for it--but why these synthetic instruments came about when there's nothing in them. And Claire's right. It's about--it's just like betting on a sports event. It's like betting on whether it's going to rain. It's like betting on a bunch of stuff that doesn't make any sense. It's not about hedging as a farmer would do it or as an airliner or a coal company or whatever it might be. This is just playing around, from my perspective. And that fact is, I think part of this playing around is why taxpayers had to bail out part of what went on, on Wall Street. And I've got some issues with that. And I, like other members on this Committee, I think you're a smart guy. And I would like to work with you. I think this country is in dire need of Wall Street reform, and I think that you could add some to the equation as long as we can bore down and get to the facts. Transparency is critically, critically important in making sure the consumers are protected. I can't tell you how many stories I've heard of folks who have lost their retirement, lost their college tuition for their kids, lost all sorts of bad things. While other folks that got bailed out are literally making millions of dollars.
BLANKFEIN: Senator, I agree. I would like to be helpful, and I will be helpful. And I would l like to say another thing. I can tell you, and I try to, what the hedging purpose was of having people be able to take long or short positions synthetically, in housing, in order to shape their portfolios. But that's not the end of the inquiry. If, at the end of the day, even if--so I am explaining what the purpose is.
BLANKFEIN: But even at the end of the day, if they're too complicated and too risky and generate the kind of risk that apparently these did, then notwith--you know, finding a social purpose or a hedging purpose in them is not the end--notwithstanding that, they may be something that should not be permitted, and so therefore I'm not making a spirited defense that anybody--anybody--could think of should be done. Clearly, the world needs more regulation.