Goldman boss defends debt swaps with Greece

The Chairman of Goldman Sachs Bank USA, the Wall Street giant's holding company, has today defended the bank's 2001 debt-swap deal with Greece - a deal that reportedly allowed the nation to hide the extent of its debt.

According to Gerald Corrigan, the deal was "consistent" with the regulations at that time, highlighted that while such a deal has since been prohibited it was legal when it was carried out. His defence of the deal comes as the European Union (EU) launches an investigation into the financial deal between Greece and Goldman Sachs after it was discovered by the EU statistics agency, Eurostat.

The so-called "currency deal", which it is being claimed reportedly allowed Greece to hide the extent of both its public deficit and national debt, has also been defended by Greece's Finance Minister George Papaconstantinou, who insisted last week that his country was not the only one using such financial arrangements back in 2001.

EU rules

Mr. Corrigan, meanwhile, said that since EU rules on the matter were modified in 2007, it suggested they "were more liberal than they could have been back in 2001". Speaking before the UK's Treasury Committee of MPs, Mr. Corrigan also suggested that the deal was far from unique at the time.

"It is true that a family of currency swaps that were entered into jointly by Greece and Goldman Sachs were of a nature that they did produce a small, but not insignificant reduction in Greece's deficit and debt," he said.

"They were very much consistent and comparable with the standards and behaviour of measurements used by the European Community [at the time]," he added.

Mr. Corrigan was giving evidence to the Treasury Committee as part of its enquiry into the global banking sector and - as part of the ensuing investigation - the EU has now given Greece until the end of February to give details of how it affected its accounts.

 

 

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