Goldman Sachs reported second quarter profits were up 65% and beat analysts expectations. While many banks and brokerage firms are still struggling in this environment, this was welcome news.
The $64,000 question is: does this mean that most other firms will have equally good results? We don’t think so.
Goldman is unique in that it has lots of friends at the Treasury. Between funds it received from the Government (directly and indirectly through AIG), and the flexibility these funds provided in allowing the firm to continue to trade large volumes of mortgages and other fixed income products, Goldman is most certainly a special situation.
It will be interesting to see how other investment banks have fared in this environment, and if Goldman is presaging better times ahead for the financial services firms in general.