Broderick Credits Mark to Market for Goldman Sachs Success

In his prepared statement to the Senate Permanent Subcommittee on Investigations, Chief Risk Officer of Goldman Sachs Craig Broderick explained how Goldman Sachs believes in a rigorous mark-to-market value assessment.
The central tenet is our daily discipline of marking all of the firm’s financial assets and liabilities to current market levels. We do so because we believe it is one of the most effective tools for assessing and managing risk, providing the most transparent and realistic insight into our risk positions and associated exposures. Goldman Sachs is one of the few financial institutions in the world that carries virtually all financial instruments held in its inventory at current market value, with any changes reflected immediately in our risk management systems.
Chief executive Lloyd C. Blankfein foreshadowed Broderick’s remarks in his own opening statement, “We believe that strong, conservative risk management is fundamental and helps define Goldman Sachs.”
During the contentious session, Mr Broderick credited Goldman’s risk management and mark-to-market accounting for minimizing its CDO losses in 2007-08.
This is an appropriate application of MTM. MTM for trading firms only. MTM disclosure for investors/banks/insurance. The accounting for investors should be different for traders and broker/dealers.