Former President Bill Clinton, speaking at a fiscal summit Wednesday, said he isn’t sure Goldman Sachs Group broke the law in setting up the complex deal that has drawn civil fraud charges from the Securities and Exchange Commission.
Still, Clinton said that regardless of whether Goldman broke the law, he questions the merit of deals between financial firms when they’re making bets on things they don’t own. “I think too much of this stuff has no economic purpose,” Clinton said, referring to the use of derivatives. Clinton said he supports derivatives for farmers and agriculture companies to hedge bets on their own crops.
He said he also supports proposals in Congress to put derivatives on clearinghouses. The Senate is trying to pass a bill that would put tough restrictions on derivatives despite push back by the financial sector and some Republicans that the measures go too far.
Clinton said the use of derivatives plays a role in a broader problem in the economy. “Too much of our growth in the last decade was in finance,” Clinton said.
Goldman Sachs executives on Tuesday testified before a Senate panel about derivatives and other deals they set up. Congress and the White House have alleged that Goldman and other Wall Street giants made risky bets that helped fuel the economic downturn.
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