Former Goldman Sachs CEO Says Company's Actions Hard to Justify

VIDEO: Jon Corzine on Goldman

In an exclusive interview with ABC News' Bianna Golodryga, Jon Corzine addresses the allegations against Goldman and also urges for financial regulatory reform. While skirting around the issue of whether Goldman acted improperly, he said that the business practices and transactions are hard to justify.

Corzine served as a senator, New Jersey governor and worked for Goldman from 1975 to 1999; he was chairman from 1994 to 1999, stepping down before the bank went public. He is now chairman of MF Global.

Bianna Golodryga: You were the head of Goldman between 1994 and '98. Would these types of business practices have been acceptable under your leadership?

VIDEO: Jon Corzine on Goldman SachsPlay

Jon Corzine: First of all, it's going to be a really uncomfortable week, a challenging week for the currency of [Goldman CEO] Lloyd Blankfein. I think actually there is a silver lining in all of this. Apart from whether these kinds of actions happened in the '90s, which is 10 years ago. Actually the derivative market hadn't developed to the extent it is today, so the challenge wasn't there. I think the silver lining is this is going to reinforce the need for moving forward with the financial regulatory reform. I think we're going to get robust financial regulatory reform like we did coming out of the 1930s. And that's going to be good for Americans. It is going to straighten out or fix a lot of the challenges that exist in the financial system, and that regulation is positive. You can always argue about the details of it. But what President Obama and the administration have put forward, what is coming through Congress, ought to get done. And the momentum, the wind behind that I think is a real positive.

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Golodryga: Would regulatory reform in its current shape right now, as the bill is shaping up, have prevented some of these practices we've been hearing about?

Corzine: There is in the legislation the need for transparency with regard to derivatives. Part of the problem, although this is a very complicated set of issues -- matter of fact, people will have to take NoDoz to go through all of the detail. The results not only of derivatives but of how mortgages were created, the expansion of balance sheets, all of the things that came -- by the way regulators not being aggressive in oversight of markets led to a problem. Goldman is actually in the hot seat now, but it was a much bigger problem. And this legislation deals comprehensively with issues like too big to fail, supervision of the markets and transparency.

Golodryga: But do you think what Goldman is being accused of is immoral -- to say the least there does seem to be a conflict of interest?

Corzine: I think the idea of hedging bets, hedging positions is a normal function. Unfortunately in this particular case, the transaction didn't appear to have a lot of underlying connection to providing money for the mortgage market. And that's going to be a problem even justifying, may be legal may not be legal. I'm not going to be a lawyer on this. That will be decided in the processes of the court. But it is going to be a very uncomfortable justification."

Golodryga: And you're an advocate of regulatory reform. A lot of your former peers and CEOs like Lloyd Blankfein and [JPMorgan Chase CEO] Jamie Dimon question some of the provisions in this bill and say that it could actually damage Wall Street and the institutions.

Corzine: Well you can argue about detail, but the fact is the more transparency, the more controls on liquidity, the more controls with regard to excessive leverage that build up in the system, not just at Goldman Sachs, but broadly across the system. The fact that we need to have regulators who are proactive in overseeing a system so they can make judgments before the fact instead of after the fact, whether the kinds of transactions that in question here are legal, are the kinds of regulatory scheming we need. I support it. It will be good for the banks themselves, but most importantly, we can avoid having eight, nine, 10 million people on the unemployment line when there's a car crash.

Golodryga: Lloyd Blankfein is testifying Tuesday. Do you think he ultimately holds responsibility? Some people are saying that he should step down to save the grace of the company name?

Corzine: I think that the issue here is the systemic problem not the individual issue. I think when we try to personalize it, and maybe that's what everybody's going to want is somebody's head, but the fact is this is a system problem and what we really need to do is get this financial regulation passed, in place, so that the public is safe, safer, in the world as we go forward.