Goldman Sachs chief will face bipartisan financial crisis panel

McClatchy NewspapersDecember 23, 2009 

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WASHINGTON — The chief executive of Goldman Sachs will be among the first business leaders grilled by the bipartisan panel that Congress established to investigate the near meltdown of the nation's financial system.

Lloyd C. Blankfein will be questioned during the Jan. 13-14 inaugural hearing of the Financial Crisis Inquiry Commission. Congress established the 10-member commission to determine how the financial collapse happened and what could be done to prevent a recurrence.

"We will be taking the testimony from hundreds of individuals as we investigate the causes of the financial crisis," panel chairman Phil Angelides and vice chairman Bill Thomas explained.

Blankfein already has offered a partial apology for his company's role in the catastrophe. Speaking last month, shortly after publication of a four-part McClatchy investigative series detailing Goldman's profiting from risky mortgages, Blankfein acknowledged shortcomings.

"We're a leader in our industry, and we participated in things that were clearly wrong, and we have reasons to regret and apologize for," Blankfein told a New York audience.

The McClatchy series reported that Goldman peddled more than $40 billion in securities backed by risky mortgages during 2006 and 2007, even as the storied Wall Street firm was secretly betting that a drop in prices would depress the securities' value.

"There is no factual basis for the theories put forward in the articles, and your claim that we misled investors is untrue," Goldman spokesman Lucas van Praag said in a letter to the editor after the series was published. McClatchy stands by its reporting.

The financial crisis commission is also scheduled to hear from Jamie Dimon, the chairman and chief executive of J.P. Morgan Chase, and John J. Mack, the chairman of Morgan Stanley.

The commission is obliged to report its findings and recommendations to Congress by next Dec. 15.

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