Goldman Sachs, in another sign that banks may be turning around, beat Wall Street’s earnings expectations as it reported a profit of $1.66 billion for the first three months of this year. The bank also said it planned to raise $5 billion in stock to help it pay back government bailout funds.
The New York-based bank said it earned $3.39 per share, easily surpassing analysts’ forecasts for profit of $1.64 per share. This compares with earnings of $1.47 billion, or $3.23 per share, in the quarter ended Feb. 29 of last year, and is a huge improvement over the $2.29 billion Goldman lost in the fourth quarter.
Hey, who knew that having all of your executives involved in the Obama administration could be so… PROFITABLE:
One has to love the sequence of events here. Back in 2004, Goldman chief Hank Paulson goes to SEC chief William Donaldson and petitions to have lending restrictions relaxed for the top five investment banks. Donaldson rolls over, the restrictions are relaxed, and it’s a disaster, as the top five banks immediately overleverage themselves — two of the five, Bear Stearns and Lehman, would actually collapse, at least partially as a result of being insanely overleveraged.
In the midst of this disaster, Paulson is named Treasury secretary. He does nothing about the worsening financial crisis until it is far too late, then allows one of Goldman’s biggest competitors, Lehman, to fail while at the same time intervening on a huge scale to save AIG, which just happens to owe Goldman a ton of money.
When AIG is bailed out, its government regulator is not in the room, but the new chief of Goldman, Lloyd Blankfein, is. In fact, Goldman Sachs ultimately receives about $13 billion of the money paid to AIG by the government in the bailout, reportedly getting paid 100 cents on the dollar for its AIG exposure, despite the fact that the bank claimed it wasn’t going to suffer severe losses if AIG collapsed.
See Also: Is TARP Investigator on Collision Course With Treasury on Bank Assets?, Goldman reports $1.8 billion profit, Afternoon Reading: Should Goldman Pay Back the Government?, The Corporate Borg, The Coming Siege of Austerity, Taxpayer Funded GS Profits, Time To Breakup Goldman Sachs, US Economy: You Think You are the Consumer, But You are Really the Product, and The Criminal in the Bank Next Door.
[tags]aig, goldman sachs, record profit, 1 billion profit, goldman sachs profit, profiteering, money making, bailout, socialism, federal bailout, TARP funds, aig, nationalization, profit from tax payers, rent seeking, corruption, larry summers, barack obama, change doesn’t mean shit, democrats are as corrupt as republicans, democracy is a fucking sham[/tags]