Lloyd Blankfein and Ken Moelis on Wall Street Risks, Rewards and Opportunities - Knowledge@Wharton
How Risks Originate
The bulk of Goldman's risks, Blankfein said, do not result from proprietary trading, but rather from facilitating client objectives. Being an effective M&A advisor, for example, means giving advice that is actionable, which frequently requires the advisory firm to support the client through loans and other balance sheet commitments. Most of Goldman's current exposure to mortgage risk came about in just this way -- through commitments to support client originators.