Ex-Goldman CEO Blankfein says bank rout may depress growth, even with robust capital

By Lananh Nguyen

NEW YORK (Reuters) – Turmoil in the banking sector will probably weigh on economic growth as lenders become more conservative, former Goldman Sachs Group Inc (NYSE:) CEO Lloyd Blankfein said Sunday.

“The greater risk environment for financials leads to husbanding of capital and risk-taking, less and more conservative investing and lending, and inevitably, lower growth,” Blankfein, who also served as Goldman’s chairman, told Reuters.

“While some banks have been hung up by poorly managed, concentrated risk, the overall banking system is extremely well capitalized and substantially more tightly regulated than in prior challenging times,” he said.

Blankfein spoke after some of the world’s largest central banks came together on Sunday to stop a banking crisis from spreading as Swiss authorities persuaded UBS Group AG (SIX:) on Sunday to buy rival Credit Suisse Group AG in a historic deal.