Legal Commentary

What Happened In December At Goldman?

By Big Tent Democrat

Floyd Norris (see also Krugman) on the Goldman Sachs conference call this morning:

7:25 a.m.| A.I.G.: Guy Moszkowski of Merrill Lynch wants to know if they made money from the now-famous government-financed American International Group transactions. The answer is cautious. Most of the impact was in December. For the first quarter, the total A.I.G. effect on earnings was, in round numbers, zero. So what was the A.I.G. effect in December? They did not say. Is it possible the loss then would have been larger without the A.I.G. bailout? We’ll see if any analyst asks.

[MORE . . .]

7:15 a.m.| December Write-Offs: They did discuss December up front (unlike in the news release). It sounds as if they took write-offs everywhere, including commercial real estate and private equity. They took more write-offs in both of those areas in the first quarter.

. . . 6:50 a.m.| Where’s December?: Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can. How did it do that? One way was to hide a lot of losses in not-so-plain sight.

Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored.

. . . The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.

This does not inspire confidence.

Speaking for me only

Full post as published by TalkLeft on April 14, 2009 (boomark / email).