WHEN: TODAY, FRIDAY MAY 7TH
WHERE: CNBC'S "POWER LUNCH"
Following is the unofficial transcript of a CNBC interview with Goldman Sachs Chairman & CEO Lloyd Blankfein today on CNBC's "Power Lunch."
All references must be sourced to CNBC.
Watch a Video
One-on-One with Blankfein
Lloyd Blankfein, CEO of Goldman Sachs speaks with CNBC's David Faber about the shareholders meeting, his testimony in front of Congress and the outlook for the company.
FABER: WE'RE WITH LLOYD BLANKFEIN CHAIRMAN & CEO OF GOLDMAN SACHS AFTER THE COMPANY'S ANNUAL MEETING YOU MENTIONED INTRASPECTION IN ANSWER TO ONE OF THOSE QUESTIONS THAT YOU RECEIVED TODAY IN TERMS OF YOUR OWN INTRASPECTION WHEN YOU LOOK BACK AT THIS RECENT PERIOD I AM CURIOUS GIVEN THAT YOU HAVE BEEN INTRASPECTIVE NOT THAT YOU AREN'T ALWAYS WHAT ARE YOU FINDING WHAT ARE YOU THINKING ABOUT WHAT CONCLUSIONS IF ANY HAVE YOU COME TO AS A RESULT OF THAT
BLANKFEIN: IN CONNECTION WITH WHAT'S GOING ON EVERYBODY IS AWARE OF THE INTENSE FOCUS ON US AND HOW WE'VE HAD TO RESPOND IN THE CONDITIONS IN WHICH WE HAVE BEEN RESPONDING IF THERE'S A SILVER LINING TO THIS FOR US IT CAUSES US TO HAVE TO BE THOUGHTFUL ABOUT THE CONTEXT IN WHICH PEOPLE ARE SAYING WHAT THEY ARE SAYING IN OTHER WORDS WE CAN SAY THIS PARTICULAR LAWSUIT WE MAY NOT THINK IT HAS MERIT OR THIS ACTIVITY DEFEND THIS ACTIVITY AGAINST WHAT SOMEBODY SAYS IS A POOR ACTIVITY BUT WE HAVE TO LOOK AT IT AND BE HONEST AND SAY SOMEHOW THERE'S A CONTEXT HERE IN WHICH THERE IS A GAP IN THE WAY WE THINK OF OURSELVES AND THE WAY THE GENERAL PUBLIC HAS THOUGHT ABOUT US AND THINKS ABOUT US AND WE HAVE TO RESPOND TO IT NOW A LOT OF OUR ATTENTION IS GOING TO STILL BE HOW DO WE WORK OUT SOME THINGS IN SOME OF THE THINGS THAT PEOPLE THOUGHT AND DEFEND CERTAIN ASPECTS OF BEHAVIOR BUT LET ME TELL YOU IT IS OUR NATURE ALWAYS TO BE SELF CRITICAL AND WANT TO IMPROVE AND THE SILVER LINING HERE IS THAT THIS CAUSES ME AND I THINK THE ENTIRE ORGANIZATION AND I THINK ULTIMATELY THE INDUSTRY TO BE SELF CRITICAL ABOUT HOW THEY DID THINGS WITH A VIEW TO TAKE STANDARDS WE MAY BELIEVE TO BE FINE AND IN OUR CASE MAYBE IN OUR CASE WE BELIEVE WE ARE ALREADY AT THE HIGHEST STANDARDS WE THINK WE ARE BUT TO SAY WHERE DO WE NEED TO GO CAN WE TAKE IT EVEN HIGHER
FABER: ALRIGHT GIVE ME SOME SPECIFICS YOU AND I TALKED ONLY A FEW WEEKS ABOUT SYNTHETIC CDO TRANSACTIONS I ASKED YOU THEN WHETHER THEY WERE APPROPRIATE YOU AT LEAST GAVE THE INDICATION COUPLE WEEKS AGO PROBABLY A LOT OF INTRASPECTION SINCE THEN THAT PERHAPS THERE COULD HAVE BEEN THINGS DONE DIFFERENTLY CAN YOU BUILD ON THAT
BLANKFEIN: I THINK IN THAT CASE AND AGAIN THIS IS WORK WE ARE GOING TO DO AND WE'RE GOING TO BE QUITE FOCUSED ON THIS IT WILL COME UP I AM SURE WITH A LOT OF DIFFERENT THINGS THE QUESTION YOU HAD ASKED WAS ABOUT THE SOCIAL PURPOSE AND I EXPLAINED WHAT THE PURPOSE OF CDOS ARE IN ALLOWING PEOPLE WITH PORTFOLIOS OF EXPOSURE TO THE MORTGAGE MARKET TO BE ABLE TO RESHAPE THEIR PORTFOLIO IN AN EFFICIENT WAY WHICH IS WHAT A LOT OF PEOPLE USE DERIVATIVES FOR ACROSS THE SPECTRUM I THEN SAID THERE WOULD BE ANOTHER SIDE LIKE COMPLEXITY IN A LIQUIDITY WHICH MIGHT MEAN NOT WITHSTANDING THAT PURPOSE WE MIGHT DECIDE NOT TO DO THAT THAT'S AN INQUIRY WE WOULD ASK OURSELVES
FABER: IS THAT ONE YOU CONTINUE TO ASK I AM TRYING TO GET TO THAT POINT IF YOU ARE BEING INTRASPECTIVE HAVE YOU COME TO ANY CONCLUSIONS OR WHEN WILL YOU OR WHEN WILL WE SEE
BLANKFEIN: I'LL GIVE YOU CATEGORIES OF THINGS. TRANSPARENCY, HOW WE SHOW OURSELVES. I KNOW WE HAVE BEEN CRITICIZED IN THE PAST FOR NOT BEING TRANSPARENT ABOUT WHAT WE SHOW ABOUT OUR BUSINESS MIX.THERE'S ALWAYS CONCERNS. YOU KNOW THERE IS A REASON WHY YOU GET ANY PLACE YOU ARE. THERE'S INVESTORS OR SOMEONES NEED TO KNOW VERSUS YOUR OWN COMPETITIVE ADVANTAGE OF NOT WANTING TO DISCLOSE TOO MUCH. WE'RE GOING TO ANALYZE THESE THINGS AND LOOK AT THIS AND MAYBE WE'LL COME OUT WITH A DIFFERENT CONCLUSION WITH RESPECT TO VARIOUS TRADE-OFFS, HOW WE MANAGE BUSINESS SELECTION, WHO WE REPRESENT. IT CAN BE VERY FREQUENTLY THE CASE THAT THERE IS A PROPERTY IN THE WORLD FOR SALE AND MAYBE FIVE OF THE POTENTIAL BUYERS MIGHT BE CLIENTS OF GOLDMAN SACHS. HOW DO WE PICK A MOMENT?
FABER: RIGHT. AND I MEAN, THOSE ARE ALWAYS CHALLENGES AND THINGS THAT YOU DEAL WITH IN YOUR BUSINESS. THAT'S NO DIFFERENT, I WOULD THINK, THAN THE WAY YOU THOUGHT ABOUT THOSE CHALLENGES IN THE PAST.
BLANKFEIN: LISTEN. WE ARE NOT GOING TO ORIGINATE SOME NEW ISSUE THAT HASN'T COME ACROSS BEFORE, BUT HOW THESE THINGS ARE RESOLVED, HOW AN ANALYTIC, WHAT KIND OF WEIGHT YOU GIVE TO ONE CONSIDERATION VERSUS THE OTHER, MOST OF THESE ARE TRADE-OFFS IN ACTIVITIES, AND WE'RE GOING TO APPROACH THAT, FRANKLY, IN A WAY THAT'S INFORMED BY THE CURRENT CONTEXT IN WHICH WE'RE OPERATING.
FABER: THERE ARE REPORTS THAT YOU ARE IN SETTLEMENT TALKS WITH THE SEC. IS THAT TRUE?
BLANKFEIN: IT MUST BE TRUE THAT THERE ARE REPORTS BECAUSE I SAW THINGS IN THE PAPER. THE FACT IS WE'RE IN A LITIGATION WITH THE SEC, BUT THE SEC IS NOT AN ORDINARY LITIGANT THAT SOMEONE WHO REGULATES US WITH WHOM WE INTERACT ALL THE TIME ON A LOT OF DIFFERENT BASES IN THE NORMAL COURSE OF ACTIVITY. SO WE'RE INTERACTING WITH THEM REGULARLY.
FABER: SHOULD THERE BE AN EXPECTATION IN SOME WAY THAT THE FRAUD CHARGES WILL BE RESOLVED PRIOR TO GOING TO COURT?
BLANKFEIN: I CAN'T -- I CAN'T COMMENT ON THAT.
FABER: DO YOU CONTINUE TO MAINTAIN AS YOU DID VOCIFEROUSLY WHEN THE CHARGES WERE FIRST MADE THAT YOU DID NOTHING WRONG, THAT GOLDMAN SACHS HAD DONE NOTHING WRONG?
BLANKFEIN: YES, WE MAINTAIN OUR BELIEF THAT ON THE FACTS AND ON THE LAW, WE THINK WE WERE RIGHT AND ACTED APPROPRIATELY.
FABER: YOU SAID DURING THE ANNUAL MEETING AS WELL THAT THIS PERIOD HAS BEEN A STRAIN ON GOLDMAN SACHS AND ON ITS CLIENTS.
BLANKFEIN: YES.
FABER: WHY?
BLANKFEIN: WELL, WHEN YOU RETAIN GOLDMAN SACHS, YOU'RE RETAINING US FOR OUR CAPABILITY, OUR COMPETENCE, OUR DISCRETION, OUR ABILITY TO GET THINGS DONE CLEANLY. AGAIN, IT'S ABOUT THE CLIENT. IT PUTS -- YOU CAN'T DENY THAT WITH GOLDMAN SO MUCH IN THE FOREFRONT AND SO MUCH IN THE NEWS, PEOPLE HAVE TO OVERCOME A CERTAIN READINESS TO POTENTIALLY JOIN THE PUBLIC SCRUTINY IF THAT'S THERE. NOTWITHSTANDING THAT, AND I DON'T TAKE THIS FOR GRANTED, AND BELIEVE ME I'M VERY GRATEFUL, OUR CLIENTS HAVE BEEN TREMENDOUSLY LOYAL TO US. THEY'VE SUPPORTED US IN EVERY WAY BEYOND MY EXPECTATIONS. AT THE SAME TIME I SAY THAT, I ACKNOWLEDGE I REGRET THAT WE'RE IN A POSITION WHERE SHOWING SUPPORT FOR US IS NOT BEING MADE EASY FOR THEM.
FABER: RIGHT. WHAT YOU SAID DURING THE MEETING, THAT THEY WERE ENTHUSIASTIC. CAN YOU GIVE ME ANY EVIDENCE IN TERMS OF WHAT YOU'RE TALKING ABOUT WHEN YOU SAY YOU'VE BEEN SHOWN SUPPORT?
BLANKFEIN: I THINK OUR CLIENTS HAVE, YOU KNOW, STUCK WITH US, AND YOU'LL SEE THE PROOF IS IN THE PUDDING.
FABER: RIGHT. AGAIN, I KNOW YOU DON'T LIKE TO COMMENT QUARTER TO QUARTER. I ASKED YOU THIS TEN DAYS AGO, ARE YOU SEEING ANY DIMINUTION IN YOUR BUSINESS. YOU BELIEVE THERE IS A RESULT OF THE REPUTATIONAL ISSUES THAT ARE AT STAKE FOR GOLDMAN SACHS?
BLANKFEIN: IT'S HARD TO KNOW, BECAUSE THERE'S CYCLICAL ASPECTS AND THE MARKET AS A WHOLE IS DOING THINGS DIFFERENTLY TODAY THAN IT WAS DOING BEFORE, AND IT'S HARD TO KNOW. AND WE'LL LOOK BACK AND WE'LL BE ABLE TO SEE MARKET SHARES, BUT I BELIEVE, WE'VE BEEN SHOWN -- AND I KNOW WE'VE BEEN SHOWN GREAT, GREAT SUPPORT FOR OUR CLIENTS UNIFORMLY, AND I THINK EVEN SOME OF OUR CLIENTS ARE FRANKLY DOING MORE WITH US ESPECIALLY TO SHOW THAT KIND OF SUPPORT.
FABER: YOU BELIEVE THEY ACTUALLY MADE SOME --
BLANKFEIN: AND SOME PEOPLE HAVE HAD THAT CONVERSATION. I DON'T TAKE IT FOR GRANTED. I APPRECIATE IT --
FABER: YOU'RE NOT GOING TO DO THIS AGAIN JUST TO --
BLANKFEIN: I WOULD SAY IT HASN'T BEEN WORTH IT.
FABER: YOU AND I SPOKE AFTER YOU CAME OUT OF A VERY LONG DAY OF HEARINGS NOT THAT LONG AGO. WHEN YOU LOOK BACK ON THAT INTERACTION PARTICULARLY WITH YOU AND SENATOR LEVIN, DO YOU THINK THERE IS AN UNDERSTANDING OF WHAT YOU'RE TALKING ABOUT WHEN YOU SPEAK TO MEMBERS OF CONGRESS?
BLANKFEIN: I DO LARGELY. I THINK WHEN YOU ARE A GENERALIST, A VERY SMART GENERALIST LIKE A SENATOR WHO HAS TO HAVE A SENSE AND LEGISLATE AND BALANCE DIFFERENT ELEMENTS, JUST LIKE WE WERE TALKING A FEW MINUTES AGO, IT'S NOT A QUESTION OF IS THIS GOOD OR IS THIS BAD, IT'S HOW GOOD IS THIS VERSUS HOW BAD IS THAT, WHAT SHOULD THE TRADE-OFFS BE? I THINK THEY ARE INFORMED ENOUGH TO MAKE THOSE KINDS OF JUDGMENTS. THEY KNOW THE TECHNICALITIES OF THE MARKET. IS IT HARD --
FABER: WELL, DO THEY WANT TO ACKNOWLEDGE THERE IS A CERTAIN UNDERWRITER AND A MARKET MAKER? BECAUSE THEY CERTAINLY DIDN'T SEEM TOWARD.
BLANKFEIN: NO, BUT I THINK THEY HAD AN INTUITION THAT THIS DIDN'T FEEL RIGHT, AND TO SOME EXTENT, MAYBE I WAS INADEQUATE TO MY PURPOSE. LET ME TELL YOU, IN ALL OUR BUSINESSES, WE PUT OUR CLIENTS FIRST AND WE SUPPORT OUR CLIENTS. THAT MEANS DIFFERENT THINGS IN DIFFERENT PARTS OF THE BUSINESS. SO FOR EXAMPLE, IN AN ADVISORY BUSINESS LIKE BANKING, IT'S OBVIOUS WE HAVE A DUTY AND A RELATIONSHIP TO MAKE SURE THEY DO THE RIGHT THING. IF THEY WANT TO GO DO X AND WE THINK IT WOULD BE RIGHT TO DO Y,WE SAY, DON'T DO X, WE THINK YOU SHOULD DO Y. ON THE MARKET MAKING SIDE, OUR DUTY TO CLIENTS IS SERVED BY US. WHATEVER MARKET CONDITIONS, WHATEVER CHAOS PREVAILS, USING OUR CAPITAL TO HELP OUR CLIENTS ACCOMPLISH WHAT THEY WANT TO ACCOMPLISH, WE MAKE HUNDREDS OF THOUSANDS, MAYBE MILLIONS OF MARKETS A DAY. THINK OF SOMEBODY GOING TO THE NEW YORK STOCK EXCHANGE WHICH IS ANOTHER KIND OF MARKET. NO ONE IS SAYING, I WOULDN'T SELL THAT SECURITY HERE. NO, YOU SHOULD BUY THIS AND NOT THAT. CLIENT SERVICE AND DEDICATION TO CLIENT IN THAT CASE IS STANDING THERE AND BEING ABLE TO PROVIDE LIQUIDITY TO YOUR CLIENT NO MATTER HOW TOUGH THE MARKET IS.
FABER: BEFORE WE WRAP UP, YOU MENTIONED THE MARKET, YOU MENTIONED THE NYSE. HAVE YOU EVER SEEN ANYTHING QUITE LIKE THAT FIVE MINUTES WE SAW YESTERDAY IN THE EQUITY MARKETS?
BLANKFEIN: IT WAS VERY UNUSUAL IN THE MARKET.
FABER: HAVE YOU BEEN TOLD, DO YOU KNOW? OBVIOUSLY, GOLDMAN HAS A PRETTY GOOD FEEL FOR WHAT'S GOING ON.DO YOU HAVE AN UNDERSTANDING OF WHAT HAPPENED YESTERDAY?
BLANKFEIN: NOBODY HAS TOLD ME EXPLICITLY. I'VE BEEN GIVEN SEVERAL THEORIES BECAUSE I HAVE SEVERAL THEORIES, THERE IS I HAVE NO THEORY. I THINK WE'RE STILL EXAMINING THOSE THINGS.
FABER: BUT YOU DON'T FEEL YOU EVEN UNDERSTAND AT THIS POINT WHAT ACTUALLY -- I MEAN STOCKS TRADED AT A PENNY, AND THERE'S SOMETHING VERY WRONG.
BLANKFEIN: YOU KNOW WHAT I'VE BEEN DOING FOR THE LAST FEW HOURS, BECAUSE I CAN'T TELL YOU DOESN'T MEAN PEOPLE DON'T KNOW IT OR IT'S NOT UNDERSTANDABLE, IT'S JUST THAT YOU KNOW WHERE I'VE BEEN FOR THE LAST FEW HOURS.
FABER: HIGH FREQUENCY TRADING MAY BE BLAMED IN PART FOR WENT ON. GOLDMAN CONDUCTS THAT BUSINESS?
BLANKFEIN: I CAN'T -- I'M JUST NOT FAMILIAR ENOUGH WITH THIS THEORY. I JSUT DON'T KNOW.
FABER: WHAT ABOUT THAT BUSINESS IN AND OF ITSELF?
BLANKEIN: I THINK THAT BUSINESS IN AND OF ITSELF IS A GOOD BUSINESS AT GOLDMAN SACHS AND I THINK IT'S AN IMPORTANT LIQUIDITY GENERATOR FOR THE MARKET. I HAVE NO OPINION BECAUSE I HAVEN'T HEARD ANY CONNECTION MADE TO IT.
FABER: FINALLY EUROPE. WE'RE DEALING WITH OF COURSE A CRISIS THERE.THERE'S NOT A LOT OF BUSINESS IN EUROPE RIGHT NOW WHEN EVERYBODY IS WORRYING ABOUT WHAT'S HAPPENING WITH SOVEREIGN DEBTS AND THE ISSUES WITH THESE COUNTRIES. ARE YOU SEEING A SLOWDOWN IN EUROPE, ARE YOU CONCERNED ABOUT GOLDMAN'S BUSINESS IN EUROPE? THERE'S 5,000 PEOPLE ALONE IN LONDON.
BLANKFEIN: OF COURSE I'M CONCERNED ABOUT THE ECONOMY IN EUROPE, FRANKLY, AND THE WHOLE POLITICAL AND SOCIAL ENVIRONMENT WITH RESPECT TO THE EUROPEAN COMMUNITY. I'M PRETTY CONFIDENT THAT THE EUROPEAN SOVEREIGNS WILL DO WHAT'S NECESSARY TO RESTORE CONFIDENCE. A LOT OF WHAT'S GOING ON, NOT THAT DISSIMILAR TO WHAT HAPPENED A FEW YEARS AGO IN THE MARKET, HAS TO DO WITH CONFIDENCE AND SENTIMENT AND LESS TO DO WITH THE ACTUALALITIES OF SOMEONE'S ABILITY TO MAKE PAYMENTS. BUT CONFIDENCE MATTERS --
FABER: IT'S THE MOST IMPORTANT THING.
BLANKFEIN: IT'S THE MOST IMPORTANT THING, AND I THINK THE GOVERNMENT IN EUROPE HAS THE MOTIVE AND THE WHERE WITH ALL TO RESTORE THAT CONFIDENCE, AND I BELIEVE THEY WILL.
FABER: BUSINESS IN EUROPE IS GOING TO SLOW DOWN?
BLANKFEIN: I THINK GENERALLY BUSINESS, BUT FOR THIS INTERLUDE, WHICH IS RECENT, I THINK BUSINESS AROUND THE WORLD IS CORRELATING WITH RENEWED OPTIMISM ABOUT GROWTH, AND THAT'S CURRENT IN EUROPE AS WELL AS UNITED STATES AND ASIA.
FABER: LLOYD BLANKFEIN, THANK YOU.
BLANKFEIN: THANK YOU VERY MUCH, DAVID.
About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.
Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://nbcumv.com/cnbc/.