david.fm

Few banks can present such terrific results like Goldman: earnings jumped 91% to 3.46 billion net profits for the quarter. Over 1 billion per month.

Results are certainly outstanding and signal that management is doing things right. Compensation is up 17% and, despite popular outrage, I still maintain that rewarding hence retaining top talent is crucial and essential in the banking business. It is unthinkable that a bank in such a competitive business can sustain its activities without appropriate compensation. What is appropriate is dictated by the market;

Without going into the specifics of the case I do think that these investors obviously did know that there was someone else at the other end of the deal. Professional investors certainly had the means to calculate "what if" scenarios if the trade would have gone against them, as it did. The big question is obviously if there is evidence that Goldman did something else than acting as a financial intermediary. The SEC contends that ACA had a passive role in selecting the CDO mortgages while Goldman claims not. The problem is that the fact that they could have not afford the losses signals poor risk management skills.

If Goldman can prove good faith and that they had no incentive in having that portfolio to fail and no other major case is brought against Goldman I think that they can survive the storm without too many damages, if any.
) A crucial point is also the SEC vote that was far from unanimous and this might signal that their evidence might not be sufficient to ensure a victory in court.