NEW YORK (Bloomberg) — Billionaire Warren Buffett praised Goldman Sachs Group Inc. CEO Lloyd Blankfein and said the bank shouldn't be blamed for losses suffered by clients who invested in mortgage bets at the centre of a fraud lawsuit filed by regulators.

"He's done a great job running that firm," Buffett said in Omaha, Nebraska, in a Bloomberg Television interview before the annual shareholders meeting of his Berkshire Hathaway Inc. on Saturday.

"My choice would be to have Lloyd running it this year, next year and ten years from now."

Buffett, who invested $5 billion in the bank in 2008, has been one of Goldman Sachs' most visible advocates after the firm was sued by the US Securities and Exchange Commission for misleading clients who invested in a collateralised debt obligation known as Abacus 2007-AC1.

The SEC said last month that firms including ABN Amro Bank NV weren't told that the hedge fund led by John Paulson helped pick the mortgages in the CDOs and was betting on them to fail.

"I don't have a problem with Abacus at all, and I think I understand it better than most," said Buffett, Berkshire's CEO, at a press conference yesterday in Omaha.

Berkshire makes $500 million a year in interest on its Goldman Sachs preferred stock. The warrants Buffett negotiated as part of the deal give Berkshire the option to buy $5 billion of common stock for $115 a share. The shares closed at $145.20 on April 30. Berkshire's paper profit on the warrants is about $1.3 billion based on that price, down from about $3 billion before the SEC lawsuit was announced.

The bank, which said the lawsuit is unfounded, must weigh the risks of a legal battle against the benefits of a more immediate resolution. Politicians have vilified the New York-based firm as a symbol of the Wall Street excess that led to the collapse of the subprime residential real estate market.

"There are plenty of CEOs I'd like to see gone. Lloyd Blankfein isn't one of them," Charles Munger, vice-chairman of Berkshire, said at the meeting. Munger also praised Goldman Sachs chief financial officer David Viniar, calling him a "star" in an interview yesterday.

Berkshire has four decades of experience with Goldman Sachs and no expectation that the bank would offer investment advice or disclose its own stance on trades, Buffett said.

"We are in the business of making our own decisions," said Buffett, 79. "They do not owe us a divulgence of their position."

Senator Carl Levin, who led a sub-committee that pilloried Blankfein on April 27, accused the bank of conflicts of interest for selling mortgage bets to clients as it cut its own housing exposure.

Bailed-out insurer American International Group Inc. and failed securities firm Bear Stearns Cos. are among companies hobbled by losses on investments from Goldman Sachs, the most profitable firm in Wall Street history.

The European Union is probing Goldman Sachs' role in arranging swaps for Greece that may have masked the country's budget deficit.

Goldman Sachs fell 9.4 percent April 30 on the New York Stock Exchange after reports that US prosecutors are weighing criminal fraud charges and the stock was downgraded to "neutral" from "buy" at Bank of America Corp.

Blankfein, who also is chairman, said he would step down if his leadership damaged the firm, calling that scenario unlikely, according to the transcript last week of an interview from the 'Charlie Rose' television show.

"I'll be here," said Blankfein, 55. "That's my expectation and that's my duty."