Interesting times at Goldman Sachs.
In September of 2008 it became part of the US banking system (now the country's fifth largest bank), making it eligible for TARP funds, but also putting itself under much greater regulatory scrutiny. Lately that has also meant facing some limits on executive compensation.
The company reported that it earned $1.66 billion in the first quarter of 2009.
The company is now frantically raising capital to try to repay $5-10 billion of the $28 billion of TARP money it has received.
A few questions:
What happened in December? Or more precisely, what happened
December? It seems that the company has decided that instead of starting its fiscal year on December 1, as it has traditionally done, it will now start it on January 1st. That means that December 2008, its worst month in history (about $1.3 billion in pre-tax losses), is missing from the official reports.
How is it making so much money? The company says it's because it's one of the only players left to handle everyone's trades. But some analysts find it more likely that the company is making increasingly risky investments with its own money -- the kind that brought the entire financial system crashing down in first place. Even though it should be under greater regulatory scrutiny now, the regulators are still playing catch-up.
From Reuters:
Finally, how much of their current profit is a result of getting full payment for its previous financial bets from AIG? The failed insurer and recipient of some $167 billion in taxpayer dollars has so far paid Goldman Sachs $12.9 billion since the government bailout.
As Elliot Spitzer asked,
--DF