Blankfein: a 'responsibility' to challenge Dodd-Frank

The Goldman Sachs CEO says high-profile lobbying efforts by Wall Street are an exercise of democratic rights.

By The Fiscal Times Jun 13, 2013 4:59PM
By Josh Boak The Fiscal Times logo

Goldman Sachs (GS) CEO and Chairman Lloyd Blankfein doesn’t hate the 2010 overhaul of financial regulations known as Dodd-Frank. He just thinks the rules could benefit from his advice.

The investment banker said Thursday that the high-profile lobbying efforts by Wall Street are an exercise of democratic rights and, more tellingly, their professional expertise into how the markets work.
"We just make a contribution of ideas and what we think are facts," Blankfein said at a breakfast discussion hosted by POLITICO. "The idea that we shouldn’t state our view [is] … not only inappropriate, but an abdication of responsibility."

File photo of Lloyd Blankfein, Chairman and CEO of Goldman Sachs, on Sept. 24, 2012 in New York (© Mark Lennihan/AP Photo)The Goldman honcho said the authority for deciding the law rests with Congress, not his firm and colleagues on Wall Street. The Center for Responsive Politics ranks Goldman as the sixth biggest "heavy hitter" in political donations over the past dozen election cycles.

The only other for-profit business to have wielded as much influence during the same period is AT&T, according to the campaign finance watchdog.

Blankfein actually likes some of the reforms introduced three years ago in the law sponsored by then Rep. Barney Frank, D-Mass., and then Sen. Chris Dodd, D-Conn., both of whom have since retired. He welcomes the higher capital requirements and stress tests the government has started to apply to bank balance sheets, since he wants to ensure that his counterparts and trading partners are financially sound. Of the rules that have been finalized, and most haven’t, Goldman has been able to adapt, Blankfein said.

But the Volcker Rule is a different matter.

This element of Dodd-Frank puts limits on proprietary trading by banks with access to federal deposit insurance and the Federal Reserve. The rule has yet to be finalized, as regulators have struggled to determine the difference between legitimate market making -- trades that increase liquidity -- and bets for the house account.

Blankfein said it is impossible to regulate a "state of mind" as the Volcker Rule would. Wall Street’s alpha dog suggested that "Too Big To Fail" banks not receive a government subsidy, noting that all big firms tend to be able to finance themselves at cheaper rates than smaller rivals.

"There are advantages for big companies in an industry versus small companies in an industry," he said. "Whether that’s chemicals, oil, or finance."

Blankfein said there is no "political will" to rescue failing financial institutions with taxpayer funds, as happened during the 2008 crisis. He views the new regulations for an orderly liquidation of those firms, as opposed to an "immediate vaporization," as important but uncertain.

"It won’t be tested until it’s tested," he said. "I’m not dying to test it."

During a relatively congenial conversation onstage with POLITICO’s Ben White, Blankfein touched on other subjects such as income inequality -- noting the country had done a better job over the past three decades of delivering wealth than allocating it.

He views the U.S. economy as improving, but suggested that a change in public tone was essential for further growth. "Have less negativity" and ending "the gotcha mentality" in the media and public forum would boost morale and the economy, Blankfein said. "Sentiment is more negative than the facts command."

Josh Boak is the Washington Deputy Chief at The Fiscal Times.

More from The Fiscal Times
Jun 14, 2013 2:54AM

Letting Wall Street give advice on Dodd-Frank or the way banks should be run is like letting the Fox be in charge of the hen House. Also the way Goldman Sachs CEO and Chairman Lloyd Blankfein sees the mood of the American people and that the current negativity as a phase ? ... a phase .... Really ????? 


The middle class has been "eating it" in America for 40 years or more, and the reality of the mess is only now coming home to roost for most. Capitalism is working fine for Blankfien and his rich buddies, but it is FAILING the vast majority of Americans.


I'd like to see Blankfein  try to live one month in most Americans shoes. .... He would die of the stress and shock !!!!!!!!

Jun 14, 2013 12:51PM
"He views the U.S. economy as improving, but suggested that a change in public tone was essential for further growth."

More demand from the middle and lower class is what is essential for further growth, plain and simple. The wealth distribution changing is what needs to happen .
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116 rated 1
279 rated 2
443 rated 3
626 rated 4
667 rated 5
721 rated 6
630 rated 7
472 rated 8
292 rated 9
131 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.