(9 April 2010 – USA) Goldman Sachs has launched its avid defence over the trading of the same mortgage derivatives that the investment bank was reportedly ‘betting against’.The bank used its annual report to refute the many public criticisms of its actions, including rebutting comments made by the chairman of the Financial Crisis Inquiry Commission (FCIC) at its first hearing earlier this year.
At the inquiry, Phil Angelides, the FCIC chairman, compared Lloyd Blankfein, the Goldman Sachs chief executive, to ‘a used car salesman’ for selling what turned out to be toxic mortgage derivatives to investors, while the firm itself was making bets against the same financial instruments.
In a letter to shareholders, Mr Blankfein said the investment bank’s trading had been dictated by its business for clients.
The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, Mr Blankfein added.
Goldman’s relatively early risk reduction resulted in the bank losing less money than it otherwise would have when the residential housing market began to deteriorate rapidly, Mr Blankfein added.