Goldman Sachs leads bank rebound
Posted on: Monday, 13 July 2009, 08:15 CDT
Second quarter success at New York bank Goldman Sachs may prompt other institutions to ramp up their tolerance for risk-taking, an industry analyst said.
Richard Bookstaber, author of A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation,
told The New York Times Monday that someone takes risks and makes money -- maybe they were smart, maybe they were lucky. But then everyone else feels like they need to take the same risks.
Analysts said risk-taking may have paid off for Goldman Sachs, which returned its portion of government bailout funds last month.
As the financial crisis unfolded, the bank only posted one quarterly loss, a $2.12 billion beating last fall. In the first quarter it rebounded with a $1.66 billion gain.
Analyst say Goldman Sachs is on track to do better this quarter and may end the year with about $18 billion in compensation for a total of 28,000 employees.
As others pulled back from risks, the bank invested heavily in trading bonds and earned high fees for underwriting stock offerings, the newspaper said.
They exist, and others don't, and taxpayers made it possible,
an anonymous industry consultant told the Times.
Goldman Sachs' second quarter report is due Tuesday.
Source: United Press International
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