Congratulations, Goldman — and I wish you many, many more
Many more profitable quarters, that is. And yes, I know you’ve set aside a boatload of money to (over)pay your people. And no, that doesn’t bother me at all. You made a boatload — and so did your shareholders.
The naysayers are already emerging — hey, Goldman got bailed out, it shouldn’t be taking all these risks, it owes the government, it has to restrain compensation, yada yada.
But Goldman’s performance in particular is raising questions about how its rapid return to making strong profits will be perceived by lawmakers and taxpayers who helped it with the multibillion-dollar cushion last fall after the nation’s financial industry was shaken to its foundations.
Goldman, along with other banks, also benefited from a government program that allows banks to issue debt cheaply with the backing of the Federal Deposit Insurance Corporation. In addition, it received money from the government’s bailout of the American International Group, being paid 100 cents on the dollar for its $13 billion counterparty exposure to the insurer.
The fact is, Goldman was clamoring to repay our money long before the government allowed it to — and forked over the cash as soon as the government grudgingly agreed to accept it. If it benefited from the AIG debacle, it did it legally — and hey, guys, that’s our capitalistic systen, rewards as well as risks.
To me, Goldman’s robust second-quarter earnings — net profits of $3.44 billion, or $4.93 a share — is heartening on multiple levels. The most important one: If a well-managed company, taking realistic risks, can do this well, then maybe, just maybe, our financial system isn’t an unmitigated disaster at its core, and will be salvageable sooner than I had thought.
Once again, fingers crossed, toes crossed, eyes crossed (I ‘m afraid my body is going to calcify in this position, I’m using it so often lately!)
BTW, Rick Newman elaborated on all this on Seeking Alpha. I definitely commend his post to all of you who are having the knee-jerk “Off with their heads” reaction.