SPY - Ex-Goldman CEO Blankfein believes current banking crisis is different from 2008

2023-03-22 13:08:27 ET

Former Goldman Sachs CEO Lloyd Blankfein stated on Wednesday that the present banking crisis is very different from what occurred in 2008, when problems surrounding toxic mortgage-backed securities triggered a near-meltdown in the financial sector.

Speaking to CNBC, Blankfein, who led the Wall Street bank during the 2008 crisis, said that during that turmoil, "bad assets" were a major issue, but now the banking system is in "much better shape" and is "highly capitalized."

However, Blankfein called for vigilance during the recent turbulence in the banking sector, stating that "just because it's different, doesn't mean it's not concerning."

In terms of the policy response to the current banking crisis, Blankfein suggested that regulators face a difficult dilemma balancing the safety of depositors with the value of allowing some measure of risk-taking among companies to drive growth in the overall economy.

"Are we really relying on depositors to enforce bank standards?" he asked rhetorically, noting that having different standards for different sized banks could drive depositors to the largest institutions, eliminating diversity in the banking industry.

Looking at Wednesday's intraday action ahead of Fed's rate hike decision, the S&P 500 ( NYSEARCA: SPY ) ( SP500 ) -0.3% , the Nasdaq ( COMP.IND ) -0.1% and the Dow ( DJI ) -0.4% .

Meanwhile, Banking ETFs were lower in midday trading : The iShares U.S. Regional Banks ETF ( IAT ) -1.69% , the SPDR S&P Regional Banking ETF ( KRE ) - 1.8% , Invesco KBW Regional Banking ETF ( KBWB ) -1.43% , First Trust Nasdaq Bank ETF ( FTXO ) -0.97% and SPDR S&P Regional Banking ETF ( KBE ) -1.76% .

More about the bank crisis :

• Banks not facing 'systemic' issue - Goldman Sachs' Peter Oppenheimer
• Government should expand deposit insurance to protect against bank runs - Nelson Peltz

For further details see: