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Fallout: The Financial Crisis

Now Goldman Sachs could post loss

Alisa Roth Dec 2, 2008
Fallout: The Financial Crisis

Now Goldman Sachs could post loss

Alisa Roth Dec 2, 2008


Kai Ryssdal:
Through the financial mess of the past couple of months, there’s been one name that’s stood out as relatively healthy.
Which, I grant you, isn’t saying much.
But Goldman Sachs seemed to have sidestepped a lot of the problems that laid its competitors low.
Notice I said seemed, as in, the past tense.
The Wall Street Journal reported today that Goldman’s run of good luck may be coming to an end.
From New York, Marketplace’s Alisa Roth reports.

Alisa Roth:
Goldman Sachs still has almost two weeks to go before it reports fourth quarter earnings. But Wall Street’s already playing a spirited game of limbo with Goldman’s estimates–how low can they go? One analyst is predicting losses of $2.3 billion.
Another $2.7.
Burt Ely is a banking consultant. And he says he wouldn’t be surprised if the bank lost money this time around.

Burt Ely: Goldman has done relatively well compared to its competitors but I don’t think there are any banking or financial companies of any size that aren’t experiencing problems in this economic downturn, particularly given how the markets have been performing.

If Goldman did lose money in the fourth quarter, it would be the first time since the bank went public in 1999.
Part of Goldman’s problem is figuring out how things work in a post-apocalyptic world. Among other things, it’s not supposed to be making the kinds of risky bets that helped it make money in the past.
Michael Wong is an analyst at Morningstar. He’s a little more optimistic than some of his colleagues.

Michael Wong: During all the previous quarters, they hedged pretty well. If they have continued to hedge well for the fourth quarter, there might actually be a slight positive surprise from the doom and gloom that everyone is predicting.

In any case, those gloomy predictions aren’t helping Goldman’s stock any. Just three months ago, it was trading at more than $160 a share. It closed today at $65.

In New York I’m Alisa Roth for Marketplace.

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