Davos WEF
Davos WEF

Goldman CEO Blankfein: Not all bank regulation 'is serving the interest of safety and soundness'

Blankfein: Rally can keep going but a lot can go wrong

Goldman Sachs CEO Lloyd Blankfein said Wednesday that not all government regulation on financial institutions was worthwhile.

"I think it's time to look at this stuff. Not all the regulation is serving the interest of safety and soundness, and certainly on a cost-benefit analysis it's not. That's not saying we want repeal of all regulation or repeal of Dodd-Frank or anything like this," Blankfein told CNBC from the World Economic Forum in Davos, Switzerland.

Blankfein also said that a higher-growth economy should sustain the market rally that began after the U.S. presidential election.

Lloyd Blankfein, CEO, Goldman Sachs Group
David A. Grogan | CNBC

"There's a lot that can go wrong, but I think we're at the beginning of a change in the cycle," said the head of Goldman Sachs, which has seen several of its former executives tapped for Cabinet or advisory posts by the President-elect Donald Trump.

"My base case is this can keep on going," he said.

U.S. stocks have rallied to record highs since the election on bets of increased economic growth from tax reform, infrastructure spending and deregulation from the coming Trump administration. Financial stocks have been the top beneficiary of the rally, up 15 percent over that time, while Goldman shares are up 28 percent.

Blankfein said he expects the Federal Reserve to raise interest rates two or three times this year.

While "a lot of kind of more liberal economists are even urging forbearance now because they'd like to see inflation established ... at this point it's kind of getting growthy outside and it's OK to raise rates," Blankfein said.

On Wednesday, the Labor Department reported its Consumer Price Index rose 2.1 percent year over year in December, the biggest increase June 2014.

When asked about Trump's pick to lead the Securities and Exchange Commission, Jay Clayton, Blankfein said he'd never met the lawyer but added that Clayton "has a terrific reputation in our firm."

Goldman Sachs reported quarterly earnings Wednesday that came in well above expectations, helped by a jump in trading revenue.