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Goldman Sachs admits currency swaps role in Greek crisis

Goldman Sachs USA chairman Gerald Corrigan told MPs that its currency swap deals entered into with Greece could have added to the country’s debt crisis – and said it was possible that the UK was involved in similar deals with other banks.

Speaking to the Treasury select committee yesterday, Corrigan said that the currency swap deal was not solely limited to Goldman Sachs and Greece but did contribute to the country’s current debt crisis which, it is claimed, allowed them to mask additional borrowing.

He said: “It is true that a family of currency swaps that were entered into jointly by Goldman Sachs and Greece in the late 90s and the early part of the 2000s, were of a nature that they did produce a small, but not insignificant, reduction in Greece’s deficit and debt at that time.”

He added, however, that these were in line with the standards expected at the time. He said: “However, it is very clear today, based on the investigation that I have done over the past few days, those transactions were very much consistent with the standards of behaviour of measurements used by the European community.” When pressed by MPs, he said “with the benefit of hindsight… the standards of transparency could have been and probably should have been higher”.

When asked if it was possible that the UK had entered into similar deals, he replied “it is possible”, but that he did not know specifically if other had similar deals in place.

The swap deal that Goldman Sachs and Greece made in 2001 is now prohibited, with the EU modifying standards in 2007.

Corrigan suggested that the standards might have been too liberal at the time. He said: “Those standards were modified in 2007, which suggests that they were more liberal than they could have been back in 2001.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Unregulated activities? How many other countries face similar if not more significant problems? UK in particular.

  2. Funny how Goldman Sachs can show exorbitant profits and yet get a 10 billion dollar bail out from the US goverment and ask for more.

    This article didn’t mention that Goldman Sachs charged 300 million dollars for this loan/ transaction that was passed on to the average Greek citizen as debt.

    This article also didn’t mention the Greek Prime Minister Constantine Simitis’ who was head of state at the time.

    Goldman Sachs, engaged in a controversial “currency swap” with the Greek government in 2002 during Greek Prime Minister Constantine Simitis’ term as head of state.

    Simitis, whose real name is Aaron Avouris, a Jew, was the key player along with Lucas Papademos, who was Governor of the Bank of Greece at the time and former senior economist of the Federal Reserve Bank of Boston, in brokering the deal with Goldman Sachs.

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