Goldman CEO: Clearinghouses May Increase Risks

Bloomberg is reporting that Goldman Sachs (NYSE: GS) CEO, Lloyd Blankfein, believes using clearinghouses increase risks in an “extreme” crisis.

“I agree that clearinghouses make things less risky for the regular crisis, but in an extreme crisis that could affect the clearinghouse itself” and it's “dramatically more risky,” Blankfein said at a finance and regulation conference in Brussels today. “We have to make sure that something that we do to reduce the risk in a once-in-a-20-year storm doesn't increase the risk in a once-in-a-50-year storm.”

“Otherwise, the clearinghouse becomes the biggest systemic risk in the world,” he added.

…Yet another reminder that unintended consequences arise when the government steps its toes in the free-market.

For the full article, please.