Goldman Sachs Group Inc (NYSE:GS) CEO Lloyd Blankfein spoke with Bloomberg Television’s Erik Schatzker and Stephanie Ruhle from the World Economic Forum in Davos today about the outlook for financial markets, the firm’s hiring practices and the banking industry.

Lloyd Blankfein

On the reputation of the banking industry, Blankfein said, “A lot of work has been done, a lot of work still to do, and we will be in the penalty box of the American public. And why not? It was a very big trauma, there were a lot of causes, but one of them has to be poor risk judgments made by certain banks and to the extent that banks were getting a lot of benefits from their good risk management and it turned out to be flawed, you know, it is fair that you pay some price of reputation when it does not go well.”

Blankfein on whether the emerging markets situation can be contained or whether there’s a risk of contagion:

“Yes to both. It can be contained and there is a risk of contagion. I think right now, one of the macro themes in the market, is that emerging markets are under some pressure. Why not? They are higher yield, riskier, people know what they’re getting into when they have them. At the same time, the growth potential is so high that they are attractive. They will go through fits and starts. This is an example of each of these countries has their own dynamic, but here in davos you hear Argentina lumped in with China lumped in with Turkey. And of course different dynamics, but there are moments in time where you do not distinguish among them. They are just emerging markets like it is a single macro event.”

On whether investors truly know what they’re getting involved in, specifically in regards to Argentina, South Africa and Turkey:

“They are different, but there are times when, just like in credit markets, where the dynamic of a specific company overrules. What does the CEO do, what has the business done, what is the strategy, what are the returns of a company by company, but sometimes the market is overwhelmed by macro concerns and you just go credit. And then every credit instrument moves together.”

On whether we are ready if the market turns:

“The market could turn and it could turn radically, but we are at a very high place. People expect consolidation anyway. I would wait a while before i say there is a complete reversal. In fact, I would say that people are looking at their watches, waiting for a consolidating kind of move. I’m not suggesting that is the specifics of Argentina are going to be the same as others. Those have separate dynamics, but on the whole, the markets have gone up very far in a kind of a single direction without much of an interruption or a turnaround. This feels normal. Does it have to stay that way? No it doesn’t, but I wouldn’t be expressing a lot of anxiety.”

On whether this could be the event that starts to trigger the testing of the fragile five and some other emerging markets:

“It could be, but we are at a very, very high level.”

On whether he expects it:

“No. It might. I’m in the risk management business. I spend 98% of my time wallowing in anxiety over the 2% worst possible events. Of course we spend time thinking about this. Of course these things might happen. If you are asking me what is going to happen, it would be very abnormal if we had consolidating moves in the assets that have gone up so much.”

On whether he would have said he’s in the risk management business seven years ago:

“We are always in the risk management business. Sure it has changed. There is more scrutiny, more second-guessing, more adverse consequence to making a mistake, which you inevitably do. More oversight, more wanted to record your state of mind, your present state of mind every time you do something because life has made us a little bit more aware, but the value of a contemporaneous record as to what you are thinking, what you are doing. But basically then and now, we are the other side of what people want to do, and that is not always easy. People who plan to do transactions and make investments, they have maybe been thinking about it for six months or a year. They’ll call us on the phone and they will say what price would you show me to be on the other side of this transaction and can you tell me in 20 minutes? That is our business. People unload their risk on us.”

On whether his quality of life is worse now than when he started at Goldman Sachs:

“Quality-of-life…I measure things on a lot of different dimensions. Quality of life has not been in front of mind…I like a lot of aspects of the job, I like the problems, I like the challenges, i like dealing with people who are ambitious and want to handle difficult new things, the ability to deal, like we do here at Davos, deal with innovators, but guess what? We had big problems how to deal with that. To this day, I am spending a lot of my mind dealing with legacy issues, as i need to. Resolving the legacy issues for the sake of the past, but also resolving the legacy issues for the sake of doing things better in the future. I would rather be doing all those other things. Pricing, listening to people pitch their companies, asking me whether we can raise capital for them or not, trying to decide whether they’re winners or losers, talking to our investors — that is what I find on for, but you do not always get…It is like the president, you know, so much ambitions to be a peacetime president, guess what, there is a war. You do not always get the period of time that you want.”

On what mistake he’s most worried about Goldman Sachs making now:

“All mistakes have leverage, and leverage, I mean consequences. I would say one of the biggest sources of anxiety now has to do with technology and the leverage that comes from doing things quickly, instantly, in huge side and in a way that cannot be intuitive. Your reliance on technology — just think of what happened to target. Somebody enters a system that could have been entered from any one of tens of thousands of places, and from that had the leverage to steal over 100 million identities or something like that. People have exposure to that. You could make, you know, you can have an arms race of defensive measures and other people get attacked — that is a very hard thing to have perfect assurance. I worry about the things that the world and we assume we have control over. There are some aspects of things that could go wrong that you not feel like you have as much control over. By the way, when i say technology, I am thinking of mistakes as well as thinking of intentional

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