Goldman's Cohn: Firm Didn't Drive Down Mortgage-Asset Marks
Gary Cohn of Goldman Sachs
Andrew Harrer/Bloomberg
Gary Cohn, president and chief operating officer of Goldman Sachs Group Inc., arrives to a Financial Crisis Inquiry Commission hearing on the role of derivatives in the financial crisis in Washington.
Gary Cohn, president and chief operating officer of Goldman Sachs Group Inc., arrives to a Financial Crisis Inquiry Commission hearing on the role of derivatives in the financial crisis in Washington. Photographer: Andrew Harrer/Bloomberg
Goldman Sachs Group Inc. didn’t mark down values of mortgage-backed securities to drive down prices, President and Chief Operating Officer Gary Cohn told a U.S. panel examining collateral calls that almost toppled American International Group Inc. in 2008.
“To me, it’s simple,” Cohn, 49, told the Financial Crisis Inquiry Commission today, responding to a question about what basis the New York-based bank had for marks on its securities. The legitimacy of marks are demonstrated by “actual trades and the fact that we were willing and aggressively willing to liquidate our portfolio back to our clients at those prices.”
Goldman Sachs, which set a Wall Street record for a U.S. securities firm’s profits in 2007, is battling accusations from regulators, members of Congress and former clients that it designed mortgage-backed securities it knew would fail and bet on their collapse by buying credit-default swaps, which pay out in the event of a default. The commission is questioning Cohn and Goldman Sachs’s chief risk officer, Craig Broderick, in Washington during the first half of a two-day hearing on practices in the market for derivatives.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
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