Goldman Chief Shrugs Off Writedown Rumors
Don't expect Goldman Sachs (GS) to join the growing ranks of its competitors blindsided by multibillion dollar writedowns anytime soon, CEO Lloyd Blankfein said Tuesday.
Goldman has been under the microscope after reporting glowing third-quarter results as competitors, including Merrill Lynch (MER) and Citigroup (C), ousted CEOs on the heels of much larger than expected writedowns of asset-backed securities.
But Blankfein, speaking at a Merrill Lynch Banking and Financial Services Conference in New York, dismissed concerns that the Goldman franchise would take a similar hit in the near future. Responding to questions about whether Goldman would be announcing potential writedowns, the Goldman chief flatly said, "No."
Blankfein's remarks come after two weeks of speculation and rumors that suggested that Goldman was preparing to announce billions in losses on collateralized debt obligations, or CDOs.Goldman maintains a net short position in the mortgage business and said that it remains relatively bearish on the sector at this point, Blankfein noted. The firm also downplayed the potential impact of new accounting rules that would change the way in which firms account for hard-to-parse assets, including leveraged loans and CDOs. The statements sent Goldman's shares up about 6.7% in midday trading. The Goldman chief commented broadly on the company's culture and the firm's emphasis on strong risk management and client relationships as strong drivers for its ongoing performance.
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