Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said the credit crisis that's forced almost $250 billion in losses and writedowns at the world's biggest finance companies may be approaching an end.
``We're closer to the end than the beginning,'' Blankfein, 53, said today at the company's annual shareholder meeting in New York. ``We're maybe at the end of the third quarter, or the beginning of the fourth.''
Blankfein's comments follow similar remarks by Morgan Stanley Chief Executive Officer John Mack, who said earlier this week that the end of the credit-market contraction that began with subprime mortgages may be in sight. Mack said it would probably last ``a couple of quarters'' longer.
After the collapse of the subprime mortgage market in the past year, losses spread to leveraged loans, commercial real estate and municipal bonds. Goldman, the biggest securities firm by market value, posted record profit last year, avoiding writedowns that caused historic losses at Merrill Lynch & Co. and Citigroup Inc.
Still, first-quarter earnings fell 53 percent, the biggest decline since Goldman Sachs went public in 1999, on losses from investments and lower revenue from trading and investment banking. The drop followed four consecutive years of record profit.
While Blankfein said the credit crisis may be in its final quarter, he also pointed out that in sports events the fourth quarter tends to last longest. He said he would make ``no promises'' on how much longer the crisis could last.
`Very Nervous'
``As the world is nervous, so are we,'' Blankfein told shareholders. ``Our resting state, in good times, is to be very nervous.''
All 12 of Goldman's board members won re-election to the board for another year with more than 97 percent of the vote, the company said at today's meeting. Support for a so-called say-on- pay proposal that would give investors a non-binding advisory role on executive compensation was backed by 42.7 percent of the vote.
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