Goldman Sachs Group Inc , accused of fraud by the U.S. government, will undertake a rigorous self-examination, its CEO Lloyd Blankfein said at the investment bank's annual shareholder meeting on Friday.

There is no bigger priority for our board of directors and management than to undertake a comprehensive review of all of our business practices, Blankfein told shareholders.

Goldman will establish a business standards committee that will report suggestions to management on standards and transparency, he said.

The committee, which Blankfein mentioned during U.S. Senate hearings last week but explained in more detail on Friday, is the latest sign that Goldman is responding to the concerns of regulators and the public backlash facing the firm.

Goldman is facing civil fraud charges from the U.S. Securities and Exchange Commission, which accused the bank of failing to tell investors who bought risky debt tied to subprime mortgages that the underlying debt was chosen by John Paulson, whose hedge fund bet that it would lose value.

Goldman has drawn the attention of a Senate subcommittee and is facing shareholder lawsuits. It also is facing a Justice Department criminal investigation, sources previously told Reuters.

The Wall Street Journal reported on Friday that Goldman has commenced settlement discussions.

Blankfein, who testified before a U.S. Senate subcommittee last week, said on Friday that it was not the most comfortable moment in my life.

Blankfein said lawmakers in Washington asked that Goldman return to help assess the impact of financial regulation. Goldman has a duty to explain the ramifications, he said.


For the past year, Goldman has faced a backlash over its quick rebound from the financial crisis and its bonus pool, which topped $16 billion last year.

The Rev. Jesse Jackson raised some of those criticisms on Friday, expressing concerns about Goldman's success while others struggled.

Blankfein, who said late last year he was doing God's work, made an effort to demonstrate humility on Friday.

There is no future for Goldman, certainly no success for Goldman Sachs, unless the economy as a whole grows, and the economy grows in a way in which it doesn't create a wider divergence, he told Jackson. If there is a silver lining, it certainly affords us an opportunity to be introspective.

Goldman shares turned positive on Friday, rising 1.2 percent to $144.03 in midday trading. They were the top performer in the Amex Securities Broker/Dealer Index <.XBD>.

Some have speculated that Blankfein might not be able to keep his job through the struggles facing the firm, but he did not offer any indication on Friday that he would step aside.

Longtime corporate gadfly Evelyn Y. Davis kicked off the question and answer session by calling for Blankfein's voluntary resignation -- and setting a deadline of Monday.

I have no current plan to step down on Monday, answered Blankfein, cracking a smile.

Davis persisted, later asking Blankfein, If you won't resign by Monday, how about by the end of the month?

Blankfein again retorted, I have no intention of doing that right now.

One shareholder from Yonkers received loud applause when he expressed his support for Blankfein.


Shareholders backed the company's nominations for directors and a proposal for an advisory vote on pay. They defeated a proposal by The Maryknoll Sisters of St. Dominic relating to the use of collateral in derivatives trading.

Shareholders defeated a proposal urging the company to separate the roles of chairman and CEO. Goldman's board has recommended a vote against that proposal.

Blankfein, who is also chairman, said at the meeting that splitting the chairman and CEO roles would undercut the board's judgment.

Our bylaws and our policy don't require that the chairman and CEO be in one office, he said. It is the judgment of the board.

(Reporting by Steve Eder; additional reporting and writing by Maria Aspan. Editing by Gerald E. McCormick and Robert MacMillan)