Goldman Sachs (GS) Chief Executive Lloyd Blankfein, delivered a speech Tuesday to the Council of Institutional Investors in Washington. The top Goldman exec. said that despite the downturn and anger, the U.S. should avoid acting on any protectionist or anti-trade overtones.
Blankfein, in his comments, did not specifically blame any specific player for the 2008 financial meltdown, but noted that the credit rating agencies did have a role to play. (most probably referring to the big3- Moody’s, S&P and Fitch).
Too many financial institutions and investors simply outsourced their risk management. Rather than undertake their own analysis, they relied on the rating agencies to do the essential work of risk analysis for them….
This overdependence on credit ratings coincided with the dilution of the coveted triple A rating. In January 2008, there were 12 AAA-rated companies in the world. At the same time, there were 64,000 structured finance instruments, like CDO tranches, rated AAA. It is easy to blame the rating agencies for their credit judgments. But the blame is not theirs alone. Every financial institution that participated in the process has to accept part of the responsibility.