Goldman Sachs

Goldman Sachs - Biggest Profits Ever - How?

Today Goldman Sachs posted record profits.

Goldman Sachs Group Inc. posted record earnings as revenue from trading and stock underwriting reached all-time highs less than a year after the firm took $10 billion in U.S. rescue funds.

Second-quarter net income was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement. That surpassed the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg and was 65 percent higher than last year’s second quarter.

Oops, not so fast! Goldman is being blasted for using the same risky trading model that caused so many other firms to bring the economy to it's knees. Bloomberg:

Something Wicked This Way Comes - Goldman Sachs & Software

Zerohedge has been covering the Sergey Aleynikov story and some very strange details are emerging. It seems there is some proprietary code for high frequency trading which is amazingly profitable, as in too profitable.

From the Wall Street Journal:

In a commentary Thursday Iati offers some thoughts about how important algorithmic trading has become to the market. His conclusion hints at the significant power of the programmers.

Matt Taibbi shreds Goldman Sachs excuses

Matt Taibbi has been wading through the objections to his Rolling Stone article a few weeks ago detailing how Goldman Sachs has profited obscenely by using its political influence to help create, then prick, a series of financial bubbles over the past century. Taibbi's reply is very much worth reading, to see the depths to which defenders of the financial status quo will stoop, such as hurling the "anti-semitic" charge. But, here is the conclusion, which I consider the best part:

Goldman Sachs - Biggest Profits Ever - How?

In case you missed it:

Goldman Sachs Goldman to make record bonus payout:

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company's prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever. Figures next month detailing the firm's second-quarter earnings are expected to show a further jump in profits. Warren Buffett, who bought $5bn of the company's shares in January, has already made a $1bn gain on his investment.

Is this a 'Moral Hazard' in the making?

Will Goldman Sachs be a case study in 'Moral Hazards'? Goldman is increasing its risk-taking at a time when taxpayer dollars are still in its coffers.

Goldman Sachs Group Inc., unbowed by the securities industry’s worst year since the Great Depression, increased its trading bets at the fastest rate on Wall Street.

Interesting time to increase your risk. Here is some perspective on the amount of risk.

Goldman Sachs’s so-called value-at-risk, the amount the New York-based bank estimates it could lose from trading in a day, jumped 22 percent to $240 million in the first quarter, twice what Morgan Stanley stands to lose, company reports show. VaR climbed 2.8 percent in the same period at JPMorgan Chase & Co. and dropped 14 percent at Credit Suisse Group AG.

Goldman Sachs Selling Stock to Pay Back TARP

Now here is an interesting story:

Goldman Sachs Group Inc., by selling stock to help it repay $10 billion to the U.S. Treasury, may pressure competitors to follow suit or appear dependent on government support, analysts said.

The company, scheduled to report earnings April 14, is considering announcing the share sale as early as next week, the Wall Street Journal reported yesterday, citing unidentified people familiar with the matter. Lucas van Praag, a spokesman for New York-based Goldman Sachs, declined to comment.

Now while the report states Goldman Sachs owes $10 Billion, the reality is, through AIG, Goldman Sachs received $12.9 billion.

I'd say that's a very nice free profit by getting 100% payouts via AIG.

AIG Audit on CDS Payouts

The TARP Inspector General is opening an audit on AIG payouts.

American International Group Inc.’s payments to banks including Goldman Sachs Group Inc. after the insurer’s bailout are being probed by the chief watchdog of the U.S. financial rescue program.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, has opened an audit into whether there were attempts made by New York-based AIG or the government to reduce the payments, according to an April 3 letter he wrote to Representative Elijah Cummings. The Maryland Democrat had requested the probe last month along with 26 other lawmakers.