AMNA NAWAZ: The markets had their worst day today since the war in Iran began, and oil prices saw another big jump.

I spoke about the broader concerns around these latest events yesterday with Lloyd Blankfein, the former CEO of Goldman Sachs.

He's also the author of a new book called "Streetwise: Getting to and Through Goldman Sachs."

And I began by asking him about the potential economic impact of the war in Iran.

LLOYD BLANKFEIN, Former CEO, Goldman Sachs: Generally, these kind of geopolitical events, as long as they're not long in duration and no big surprises, they generally don't affect markets other than in the short term.

What would be a problem that would affect the longer term?

I suppose if they close the Straits of Hormuz, oil prices stayed up, that would feed into inflation, and that would create other kinds of dislocation.

I personally don't expect that, but as somebody in the risk management business, I would be prepared for those eventualities.

It's certainly possible and certainly a concern.

So there's a lot of worries, but everything could actually work out.

AMNA NAWAZ: If it's a shorter conflict, you're saying.

That's what... (CROSSTALK) LLOYD BLANKFEIN: If it's a shorter conflict.

Well, if it's a long conflict, but it doesn't -- but there's no great effect.

We're not dealing in a part of the world that's a really big part of the global economy other than the fact that it sources a lot of energy.

AMNA NAWAZ: There's so many wonderful insights in your book about you navigating both good times and really tough times running Goldman Sachs, and you have talked too about how everything has cycles.

And you said something about how we're getting close to the end of the late stages of this, meaning the good market cycles.

We're due for a kind of reckoning.

That caught my attention.

Are you worried about a recession?

LLOYD BLANKFEIN: One has to, but I would say my base case is that things are going pretty well.

For example, GDP is pretty good.

We have inflation is getting under control.

It's not where exactly the Fed would like it, but kind of almost where it would like it, into a world where there's -- where employment's very good, growth is pretty good, always concerns, inflation, a concern, but pretty tame.

Into this pretty good market, pretty good economy, we are probably going to lower rates.

For sure we're going to lower rates.

It's a question of how much and when.

And we have a lot of fiscal stimulus coming in.

The Big Beautiful Bill or whatever you would like to call it, has to come.

And, by the way, there's stimulus owning two big expenditures by the hyperscalers who are investing in A.I.

And A.I.

itself is kind of stimulative if it creates more productivity.

So I'd say all the signs are good, and usually when all the signs are this good, I really worry.

AMNA NAWAZ: You write in the book about growing up in East New York, in Brooklyn, about growing up in the projects there, about your very humble beginnings.

And you talk about how that kid from Brooklyn is always kind of in you, whichever room that you're in.

And I wanted to ask you about another tough time that I know you helped to navigate Goldman Sachs, which was the 2007-2008 financial crisis.

And there was a sense that the crisis ended with financial institutions being bailed out and homeowners who ended up in foreclosure not being helped.

And there was a sense of sort of unfairness to it all, right?

LLOYD BLANKFEIN: Right.

AMNA NAWAZ: People who are still very much reckoning with it.

LLOYD BLANKFEIN: I think that's a major contribution to the polarization we feel to this day.

AMNA NAWAZ: Well, I want to ask you more about that too, but in terms of that kid from Brooklyn, when you're in that room, do you -- does that sense of unfairness speak to you?

Do you get why people saw that as unfair?

LLOYD BLANKFEIN: Sure.

And I understand why it happened.

And, again, not to challenge the predicate about bailouts and who got who got helped and who got that -- and all these institutions were all different from -- all difference from each other.

AMNA NAWAZ: Yes.

LLOYD BLANKFEIN: But, certainly, we had a financial bubble.

Individuals were buying houses they couldn't afford and multiple houses, making investment.

There was a relaxation of discipline.

It felt like to people that trees were growing to the skies.

Certainly, as between consumers and retail and the financial institutions themselves, the government should want to help out the individuals and the people and let the big institutions fend for themselves.

But we were into a recession and a banking crisis.

The government never wanted to bail out or even help the banks.

The problem with the banking crisis is that the banks themselves, when they get money, they have to husband it, they have to restore their reserves.

And unless you put the banking system in better shape, you aren't going to be able to do anything for the real economy.

And that's really what happens.

And, unfortunately, one of the consequences of that was to disproportionately help what people would have regarded as less deserving financial institutions at the expense of the general public.

And that's a situation that pertains -- that we're still wrestling with this today more than 15 years later.

AMNA NAWAZ: Yes, and that people are very much still grappling with, right, in terms of digging out of financial holes.

LLOYD BLANKFEIN: And it bears out.

We just talked about the tailwind that we have in the economy.

That has been very good for people with assets, because assets have been going up in value, assets including stock, one form of assets.

But all assets have been going up in value.

But if you're part of the economy that doesn't have assets, you are -- you haven't been participating.

And so the gap between the people with assets and the people without assets have widened out.

And, again, there's the polarization.

So you can ask two people to comment about the economy.

One will say it's fantastic, and another one say, what are you talking about fantastic?

I'm barely scraping by.

Both are right,because we really do have a bifurcated economy at this point.

AMNA NAWAZ: And you do posit this question in the book that, had we not lived through that crisis, we may not have had as polarized a society and maybe would not have elected Donald Trump.

You really believe that?

LLOYD BLANKFEIN: Well, I don't know.

There's other things.

You never know the -- you take one path.

You never know what would have been the other.

I would say it is a contributor to the overall malaise that we seem to have.

AMNA NAWAZ: There is this expectation of additional rate cuts coming from the Fed.

LLOYD BLANKFEIN: Yes.

AMNA NAWAZ: And we have also seen this president really assail the Federal Reserve and go after Chairman Jay Powell in a very personal way.

He's made clear he really wants to exert more political pressure on the institution to see the policy he wants to see in place.

LLOYD BLANKFEIN: Yes.

AMNA NAWAZ: I believe you know Kevin Warsh, right, his nominee to replace Powell in May.

LLOYD BLANKFEIN: Yes.

AMNA NAWAZ: What is Warsh up against in this role?

How would you guide him in this moment if you could give him advice?

(CROSSTALK) LLOYD BLANKFEIN: He's a big -- he can guide him.

He's very capable, very capable.

AMNA NAWAZ: Are you worried about the political pressure he will face?

LLOYD BLANKFEIN: Oh, yes.

Those are two different things.

So let me just say, I think it's absolutely crazy to be assaulting the Fed.

It does no good.

Look, we are a debtor country.

We need creditors to finance our deficits, buy our treasury.

If you -- if people think you're going to default, they're either not going to lend to you or they're going to charge a higher interest rate.

They may think, how could the U.S.

default?

We borrow in dollars and we print dollars.

How could we default?

The way the U.S.

can default is by inflating our currency, inflating the dollar, ruining the purchasing power of our currency.

That's how the United States default.

Who protects our creditors against the default, against the U.S.

inflating its currency to the point where it loses its purchasing power?

That's the Fed.

By attacking the independence of the Fed, by going at the Fed, you're telegraphing to your creditors that they may not be protected, that the dollars that they lend to you, that they hope to get back in 10 years, won't be worth what they thought it was worth.

So maybe they won't lend to us at the current rate.

So I just think it's very, very bad practice to undermine the independence of the Fed, because it's not just the Federal Reserve who hears that you're doing that.

It's the people who lend to us that are hearing that you're doing that.

AMNA NAWAZ: Lloyd Blankfein, former CEO of Goldman Sachs and now author... LLOYD BLANKFEIN: Now author.

AMNA NAWAZ: ... of "Streetwise: Getting to and Through Goldman Sachs," thank you so much for being here.

LLOYD BLANKFEIN: Well, thank you very much, Amna.