Lloyd Blankfein Testimony: Goldman Sachs Senate Hearing Preview

(Goldman Sachs story updated for Monday trading losses; Senate, Goldman comments)

NEW YORK ( TheStreet) -- A copy of Goldman Sachs ( GS) CEO Lloyd Blankfein's testimony scheduled for a Senate hearing on Tuesday shows a Wall Street CEO trying to reach out to the U.S. public, but at the same time refusing to bow to the argument that Goldman Sachs profited from the subprime mortgage crisis that sank the U.S. economy.

Blankfein will describe the day of the Securities and Exchange Commission fraud charges against Goldman Sachs as "one of the worst days of my life" in his written testimony.

However, on the most important point -- the allegations made by the SEC -- Blankfein is set to defend his firm, particularly against the claims that Goldman Sachs made massive profits from shorting subprime investments. The claims that Goldman profited heated up over the weekend when emails were released by the Senate purporting to show that Goldman itself wrote about the profits it made.
Lloyd Blankfein
Lloyd Blankfein, CEO of Goldman Sachs

"Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is we were not consistently or significantly net 'short the market' in residential mortgage-related products in 2007 and 2008. Our performance in our residential mortgage-related business confirms this. During the two years of the financial crisis, while profitable overall, Goldman Sachs lost approximately $1.2 billion from our activities in the residential housing market. We didn't have a massive short against the housing market and we certainly did not bet against our clients."

The written testimony from the Goldman Sachs CEO also chimes in on the issue of the bailout funds received by the big banks. Blankfein will say in his comments that Goldman repaid the bailout funds in full to an annualize rate of return of 23% for U.S. taxpayers.

The Goldman CEO testimony also attempts to make the subtle argument that Goldman is simply misunderstood by the American public. Blankfein will say, " Until recently, most Americans had never heard of Goldman Sachs or weren't sure what it did. We don't have banking branches. We provide very few mortgages and don't issue credit cards or loans to consumers."

Blankfein will make an effort in the testimony to respond directly to Goldman's poor public image, and will say, "I recognize, however, that many Americans are skeptical about the contribution of investment banking to our economy and understandably angry about how Wall Street contributed to the financial crisis."

If you liked this article you might like

Bank Stocks Move Higher Ahead of Federal Reserve Meeting

Former Macy's Herald Square Employees Sue Alleging Racial Profiling of Customers

Morgan Stanley Is Using Snapchat to Recruit College Students and Make Them Rich

The New Goldman Sachs Intern Class Is Revealed -- Here's What They Look Like

Equifax Execs Resign as Data Breach Criticism Intensifies