Liberal blogger Tim Fernholz at the American Prospect is following the financial regulation push pretty closely, and, like me, he listened to Goldman Sachs’s 1st Quarter conference call Tuesday morning. Fernholz noted:
Fernholz then reports that UBS banker sort of scolded Goldman for being so conservative. Fernholz than uses this scene to argue for regulation:
One problem: Goldman isn’t “so concerned about the potential that the Dodd bill will raise capital requirements and institute leverage limits.” Goldman actually endorses federal rules requiring stricter capital requirements and leverage limits. From Goldman’s annual report: “we support measures that would require higher capital and liquidity levels.”
There are plenty of reasons Goldman would like these rules, and Fernholz actually points to one of them — Goldman is already playing it conservative. Rules that force banks to play conservative don’t hurt Goldman. Such rules do pinch smaller companies who might need to take more risk in order to compete.
