Goldman Sachs CEO Admits “Improper” Hedges

Friday, January 15, 2010
(graphic: Mike Monteiro)

The federal investigation into the financial crisis of 2008 received its first mea culpa from Wall Street on Wednesday. Lloyd Blankfein, CEO of Goldman Sachs, told the Financial Crisis Inquiry Commission that his bank engaged in “improper” behavior in 2006 and 2007 when it bet against the very mortgage-based securities it sold to investors as sound investments.

Commission Chairman Phil Angelides likened Goldman’s actions to a car salesman selling an automobile with bad brakes and then taking out a life insurance policy on the driver. Blankfein replied: “I do think the behavior is improper, and we regret . . . the consequence that people have lost money in it.”
In November, McClatchy Newspapers reported that Goldman had bet that some of the $39 billion in risky securities it sold and another $18 billion sold by other firms would eventually fail. Those actions are being investigated by the Securities and Exchange Commission and Congress.
-Noel Brinkerhoff
Goldman Admits 'Improper' Actions in Sales of Securities (by Greg Gordon and Kevin G. Hall, McClatchy Newspapers)


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