Banks--- Betting on the recovery Message Board

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Non-Tech : Banks--- Betting on the recovery

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Nov 7 9:30 AM EST

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From: Road Walker	7/20/2010 3:31:06 PM
	1 Recommendation of 1428

What's bad for GS is good for the country? --- Goldman Sachs profits fall 82 percent 2 hrs 33 mins ago NEW YORK (AFP) – Goldman Sachs on Tuesday announced its profits slumped 82 percent in the second quarter, hit by a massive US fraud settlement and the costs of a new British tax on bonuses. Reporting its worst quarter since the height of the economic crisis nearly two years ago, the storied Wall Street firm said earnings were slashed on account of exceptional government payouts worth 1.15 billion dollars. The New York-based firm set aside 600 million dollars to pay for a new British tax on executive compensation and 550 million dollars to settle US government fraud charges. The announcement came just days after the firm agreed to pay the US Securities and Exchange Commission a record settlement for mistakenly giving "incomplete" information to clients. The SEC accused Goldman of allowing a prominent hedge fund to design a complex financial product for clients that was designed to fail and which the hedge fund was betting against. But Goldman's woes were not limited to strained relations with government. Reporting net earnings of 613 million dollars, Chief Executive officer Lloyd Blankfein said the business environment had become tougher for the embattled firm. "The market environment became more difficult during the second quarter, and as a result, client activity across our business declined," he said in a statement. Second quarter revenues hit 8.84 billion dollars, down 36 percent from the year before. It was a stark contrast to the first quarter of the year, when Goldman reported profits had nearly doubled to 3.46 billion dollars. This quarter profit in Goldman's all-important investment and trading businesses each fell around 35 percent versus the second quarter of 2009. There may yet be worst to come for the firm. Chief financial officer David Viniar told investors on Tuesday that the latest earnings did not include the potential cost of US financial reform, which is expected to be signed into law by President Barack Obama on Wednesday. That prospect led Standard & Poor's and other analysts to slash their estimates for Goldman's earnings this year. "Trading revenues were hurt by lower activity levels, and new rules to be enacted will likely weigh on this business," Standard & Poor's financial sector analyst Matthew Albrecht told clients.

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