Goldman Sachs reports 50 percent profit drop in the last three months

Steve Chiotakis Jan 19, 2011
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Goldman Sachs reports 50 percent profit drop in the last three months

Steve Chiotakis Jan 19, 2011
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TEXT OF INTERVIEW

STEVE CHIOTAKIS: That meeting with Blankfein today comes as Goldman reported a more than 50 percent drop in profit for the last three months. But Goldman is by no means in bad shape. A report out today by the New York Times and footnoted.com — which digs deep into regulatory filings — shows Goldman partners are reaping the rewards of a stock-option windfall. Options that were given out in the depths of the financial crisis more than two years ago.

Theo Francis is senior reporter for Footnoted. He pilfered through 5,000 pages of regulatory filings to get the story. He’s with us now from New York. Good morning.

THEO FRANCIS: Good morning.

CHIOTAKIS: Hey — how much money are we talking about here?

FRANCIS: We’re talking about a lot of money. The Goldman partners over the years — over the past twelves years since the IPO — have extracted about $20 billion worth of Goldman stock.

CHIOTAKIS: And how are these Goldman partners?

FRANCIS: These are the elite of the elite, especially if you hear them tell it. These are the top people at one of Wall Streets most excluisve and presigeous investment banks. They essentially are the ones who make the most money or run the place or who are on track to do the latter.

CHIOTAKIS: When it was looking pretty iffy for all those big bangs in 2008, Goldman was giving out a huge chunk of money to these partners as you meantioned. Money that they didn’t have to publically report. I mean is that at odds with the bailout money that they received then?

FRANCIS: Well ultimately the did publically report it. But of course in classic Goldman fashion they did it as quietly as possible. And what they essentially did is they gave their partnerrs these elite employees, they gave them the right ot buy shares at the then current stock price which of course was extremely low, right? Because it was in the middle of the financial crisis. It was either a very shrewd move or a very opportunistic move depending on how you look at it. To the public at large they look very different.

CHIOTAKIS: I want to ask you about the Goldman earnings that we got today. It looks like they took a bit of a hit last quarter with their profits down more than 50 percent. How is that going to affect the compensation for the Goldman partners?

FRANCIS: In the short run, if the stock takes a hit, then those options are less valuable. But in the long run, if Goldman keeps minting the money as it generally has done, I don’t think they’ll suffer too much.

CHIOTAKIS: Theo Francis, senior reporter for Footnoted.com. Theo thanks.

FRANCIS: Thank you.

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