Goldman Sachs profit bonanza could stoke anger

[Joanne98]

NEW YORK (Reuters) - Under normal circumstances, Goldman Sachs Group Inc (GS.N) might be afforded a moment of gloating as it struts toward what could be a banner earnings announcement just nine months after being roiled by Wall Street's worse crisis since the Great Depression.

But these aren't ordinary times for the biggest U.S. investment bank, which lately has faced a torrent of unwanted publicity stemming from employee theft allegations and an unflattering spread in Rolling Stone magazine.

Now Goldman, expected to announced second-quarter earnings on Tuesday, finds itself in a no-win situation.

If earnings are too good critics may lambaste it for ramping up risk too much and embracing a hedge fund-like model that could make it vulnerable to big market swings.

If they fall short, investors may accuse the firm of failing to live up to its reputation for being more aggressive and intelligent than its rivals.

"They are between a rock and a hard place," said Walter Todd, a portfolio manager with Greenwood Capital Associates, which owns shares of rival Morgan Stanley (MS.N).

And, regardless of the results, critics may fall back on the old "Government Sachs" refrain, a nod to the number of former Goldman defectors now working in government, and claiming special treatment.

From a public relations standpoint, Todd said that leaves Goldman asking questions familiar to the oil industry as it contended with windfall profit taxes amid spiking gas prices.

"How well do they really want to do?" Todd asked.

Analysts polled by Thomson Reuters are expecting Goldman to report net income for common shareholders of $3.54 a share.

That is down from a pro-forma $4.58 a year earlier, but would best a surprisingly strong first quarter in which Goldman reported net income of $3.39 per share.

Strong trading income and improving equity underwriting markets are expected to bolster the results, offsetting a one-time charge of $425 million related to payback of loans Goldman took from the U.S. Treasury's Troubled Asset Relief Program, or TARP.

In a noisy second quarter, Goldman repaid $10 billion in TARP loans, while raising $8.9 billion in equity, debt and asset sales to win its way out of the government program.

Getting the approval to exit TARP was considered a key step from getting out from under the thumb of the U.S. government, which has taken the industry to task for lavish compensation.

If Goldman reports strong earnings, it will confront another public relations challenge in how it translates profits to compensation for employees. Last month, the Observer newspaper reported that Goldman employees in London were briefed on the company's performance and told to expect record bonuses if the year finished strongly. Goldman has denied such a briefing ever took place. Continued.

http://www.reuters.com/article/wtUSInvestingNews/idUSTRE56969Y20090710

[asjr]

1. I suppose once a thief, always a thief. They

can't help themselves.

[Tansy_Gold]

2. Goldman? In a "no-win" situation? Are you shitting me????

:rofl: they're laughin' all the way to the bank, which they own.

This whole piece is a whitewash.

GS is the vampire of the universe. It needs a stake driven through its heart (if it has one).




TG

[Po_d Mainiac]

3. Lloyd Blankfein stuck 8ft in the air

on a 10ft pike would be attractive. Esp if all the ex CEO's were lined up and in the same condition. :evilgrin:

[Dover]

4. Fraud/Speculation

How Goldman Sachs was at the center of the oil trading fiasco that bankrupted pipeline giant Semgroup.

When oil prices spiked last summer to $147 a barrel, the biggest corporate casualty was oil pipeline giant Semgroup Holdings, a $14 billion (sales) private firm in Tulsa, Okla. It had racked up $2.4 billion in trading losses betting that oil prices would go down, including $290 million in accounts personally managed by then chief executive Thomas Kivisto. Its short positions amounted to the equivalent of 20% of the nation's crude oil inventories. With the credit crunch eliminating any hope of meeting a $500 million margin call, Semgroup filed for bankruptcy on July 22.

But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup's collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas Intermediate crude to the point that it would generate fatal losses in Semgroup's accounts.

What transpired at Semgroup was no less than a $500 billion fraud on the people of the world," says John Catsimatidis, the billionaire grocer turned oil refiner who is attempting to reorganize Semgroup in bankruptcy court. The $500 billion is how much the world would have overpaid for crude had a successful scam pushed up oil prices by $50 a barrel for 100 days.

What's the evidence of this? Much is circumstantial. Proving oil-trading manipulation is difficult. But numerous people familiar with the events insist that Citibank, Merrill Lynch and especially Goldman Sachs had knowledge about Semgroup's trading positions from their vetting of an ill-fated $1.5 billion private placement deal last spring. "Nothing's been proven, but if somebody has your book and knows every trade, it would not be difficult to bet against that book and put the company into a tremendous liquidity squeeze," says John Tucker, who is representing Kivisto...cont'd

http://www.forbes.com/forbes/2009/0413/096-sachs-semgroup-goldman-goose-oil.html

[pscot]

5. Goldman's been pulling in $100,000,000 per day

Five day week, 13 weeks equal 6.5 billions. Profits of 2.72 billions means their net has been almost $42,000,000 per day; 42% profit. Loan sharking doesn't give you that kind of vigorish. If people aren't pissed off about this,it's hard to know what it would take to make them mad. I guess Goldman employees would have to start stealing candy from children,or pushing little old ladies under subway trains.