I can smell another financial crash coming, says former Goldman Sachs chief - 𝓣𝓸𝓭𝓪𝔂 𝓢𝓽𝓪𝓽𝓮𝓶𝓮𝓷𝓽

Todd Gillespie and Sridhar Natarajan

March 3, 2026 — 6:24am

Lloyd Blankfein, who led Goldman Sachs Group through the 2008 financial crisis, is now ringing alarm bells as Wall Street steers cash from US savers into its latest lending binge: private credit.

The financial system appears to be inching toward another potential catastrophe with everyday Americans exposed to some of the losses, Goldman’s former longtime chief executive officer said in an interview with the Bloomberg News Big Take podcast. The assets at issue can be hard to analyse, may feature hidden leverage and can become tough to sell.

Former Goldman Sachs chief executive Lloyd Blankfein criticised financial firms — which have reaped riches for years from private investments — for seeking to give retail investors access to those holdings precisely at a time when they’re more likely to blow up.Bloomberg

“One has to worry about opaque assets where there’s illiquidity,” he said. “We’re getting close to the end of late stages of cycles on this — and we’re due for a kind of a reckoning.”

Blankfein, 71, criticised financial firms — which have reaped riches for years from private investments — for seeking to give retail investors access to those holdings precisely at a time when they’re more likely to blow up. Last year, President Donald Trump signed an executive order that will ease the path to putting assets including private credit and private equity into employer sponsored retirement savings plans in the US.

It’s a particularly tumultuous time for the $US1.8 trillion ($2.5 trillion) private credit market. Souring loans are stinging debt funds for some of the largest asset managers including BlackRock In the UK, banked-backed mortgage firm Market Financial Solutions was forced into insolvency last week amid accusations of fraud and double-pledging of assets.

Goldman is among numerous Wall Street firms embracing retail investors. Last year, the bank invested in asset manager T. Rowe Price Group and said the pair would collaborate to package more of Goldman’s private-market bets into retirement products.

Blankfein, whose memoir Streetwise will be published on Tuesday (US time), was lambasted by some US lawmakers over Goldman’s role in the financial crisis during a marathon hearing in 2010, the same year his bank agreed to a $US550 million settlement for allegations it mis-sold a complex financial product in the run-up to the subprime mortgage crisis. Goldman admitted no fault.

At the time, he noted that Goldman primarily dealt with sophisticated institutional clients, such as money managers, investment funds and companies. In the interview, Blankfein said that there’s a risk similar frustrations could crop up again if everyday people get stung.

“When you lose money for individual consumers — i.e. taxpayers and citizens — people in government get very, very upset. Regulators get very, very upset,” he said.

In a separate interview on Thursday, Blankfein spoke to Pablo Salame, Citadel’s co-chief investment officer and one of his former protégés at Goldman. Blankfein said he saw signs that the economy was getting closer to a crash.

Blankfein was lambasted by some US lawmakers over Goldman’s role in the financial crisis during a marathon hearing in 2010.AP

“I wonder where there’s hidden secret leverage,” he said. “Now everyone says, ‘Oh, the world’s not leveraged.’ That’s exactly what everybody said in the mortgage crisis until you suddenly discover that there was a lot of mortgage risk in Iceland.”

JPMorgan Chase & Co. CEO Jamie Dimon said in February that he’s seen rivals do “dumb things” to enhance their earnings, including making risky loans to firms that have failed. Fears about the banking industry’s risk exposure have mounted, sending the KBW Bank Index on Friday slumping the most since April.

For its part, Goldman’s asset-management arm has sought to reassure clients that redemption rates and exposures to software companies at risk of being sidelined by artificial intelligence are both relatively low in one of its biggest retail-oriented private-credit funds.

As traders remain on edge and concerns rise over failures of private lenders, there’s still an uneasy echo for some of the early days of the 2008 crisis.

“It sort of smells like that kind of a moment again,” Blankfein said at the Citadel event. “I don’t feel the storm, but the horses are starting to whinny in the corral.”

Bloomberg

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