Warren Buffett: Nothing Improper in Goldman Transaction

May 3, 2010 — -- Legendary investor and financial guru Warren Buffett said he saw nothing wrong with the Goldman Sachs transaction that sparked a lawsuit from the Securities and Exchange Commission, adding that he would be disappointed if the company's chief executive stepped down.

"I don't think he should step down," he told "Good Morning America."

"Things happen on my watch at Berkshire [Hathaway, where Buffett is chairman]. We have 260,000 employees. Someone's doing something wrong right now. It's my job to find out and do something about it. I do not think Lloyd [Blankfein] should step down. I would be disappointed if he steps down."

The SEC filed a civil lawsuit against Goldman last month, alleging that the firm defrauded investors. The SEC's claim stated that Goldman Sachs structured a collateralized debt obligation (CDO) -- an instrument tied to the performance of certain securities -- that was secretly designed to fail, which the firm failed to disclose that to its investors.

Paulson & Co., the hedge fund that helped pick the investment's portfolio of securities that were linked to mortgages, later made $1 billion by betting against the deal.

Buffett, who has invested billions in Goldman over the years, said he had looked at the transaction in question and did not see "anything improper.

"I'm not paying them for investment advisory business, I'm trying to trade with them," Buffett said in the "GMA" interview that aired today.

"If I am buying bonds from them -- and I buy bonds from them all the time -- they may be shorting those bonds to me, they may be shorting other bonds, they have a position in futures. They have a huge worldwide business to run and they have risk management."