Two top executives at Goldman Sachs have launched a defence of the firm against accusations that it bet against its own clients in the US mortgage market.
Lloyd Blankfein
In December 2006, Goldman Sachs decided to reduce its exposure to the market, despite still brokering mortgage-backed securities to clients.
Lloyd Blankfein, the bank's chief executive officer, and his deputy, Gary Cohn, have sent a letter to investors explaining the financial institution's position and maintaining the move did not amount to a "bet against our clients", reports the Financial Times.
"The firm did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated," the letter said.
It was added that the "relatively early" risk reduction strategy actually helped to prevent the bank from losing more money in the long run.
In February, Phil Angelides, the chairman of the Financial Crisis Inquiry Commission, said that he found it "troubling" that his committee had revealed Goldman Sachs had been engaged in the practice of creating and selling securities before betting against them.
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