Goldman Sachs Puts December Under a Mattress?
EmailABC News Kristi Berner reports: After Monday’s stock market close, banking giant Goldman Sachs reported better-than-expected earnings for the first quarter: $1.66 billion for the quarter-ending in March, which was more than double analysts expectations. But the news buried in yesterday’s glowing news stories on Goldman’s profits is that Tuesday Goldman filed a report with the Securities and Exchange Commission reporting a one-month after-tax loss of about $780 million for December. That’s because Goldman, as part of its conversion to a bank holding company last fall, switched to a calendar year fiscal year from a fiscal year that ended in November. So the bank’s fourth quarter earnings were reported for September through November 2008 and Goldman’s first quarter earnings were reported for January through March 2009. So what happened to December? It’s called an "orphan" month and Goldman, not surprisingly, chose to use the accounting quirk to bury a good number of their write-offs in the month not included in either quarter. Today, William D. Cohen from the New York Times mentions the convenient accounting procedure his Op-Ed "Big Profits, Big Questions." Goldman apparently was forthright about the December losses with reporters on a conference call yesterday, even though the topic was not mentioned in the bank’s first quarter earnings press release. Ryan Chittum of the Columbia Journalism Review compares how much of the press may have under-reported the Goldman earnings story yesterday.
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Let’s not forget that AIG bought back billions of devalued derivatives at 100% (at taxpayers expense). I’m sure other institutions will also be showing profits after they also dump their derivatives on the taxpayers.
Posted by: artb | April 15, 2009, 12:18 pm 12:18 pm
I thought Sarbanes-Oxley, other regulations, and Obama was going to “change” these accounting tricks that, in part, helped lead to this crisis?! And how much of Goldman’s “profits” are related to former Goldman-Sach man Hank Paulson’s or Robert Rubin’s positions in government? Or from bailouts? Or from their ability to aggrandise and buy out others (because the government only bails out a few connected players)?
Posted by: Ed | April 15, 2009, 12:46 pm 12:46 pm
All intrest should be outlawed in this country. We need strong usery laws, to stop these thiefs. First we get raped by the 35% intrest and all the made up fees there allowed, then the Fed bails out the rapist with our own tax dollars, that’s rape two, now the rapist raises there rates to rape us for the third time, as the Fed keeps giving them more money.And who allowed the FICO score to become GOD over us, dictating what jobs we get and how much we pay for insurance, another scam,and what we can buy or rent and where we live. It’s time to STOP the money changers, and put an end to them.
Ex Republican
Posted by: RGeier | April 15, 2009, 1:04 pm 1:04 pm
Ed:”Obama was going to “change” these accounting tricks that, in part, helped lead to this crisis?!”
? That’s a new one to me. How did this quirk have ANY part in the current crisis? Any impact at all, even at the smallest bank? I’m really baffled – a little used but well known reporting format that accurately transmits valuation and loss data CAUSED the current crisis… how?
Posted by: jhw539 | April 15, 2009, 1:08 pm 1:08 pm
I think we’ve been raped by these banks long enough! OUR tax money bails THEM out….and they turn around and raise their rates to confiscatory levels. I’ve never been so angry in my life!!!
Posted by: cfraser | April 15, 2009, 1:31 pm 1:31 pm
Yet another reason why the stock market is a sham and a means for those in the know to siphon off potential profits from the average investor.
Posted by: pmennick | April 15, 2009, 2:13 pm 2:13 pm
jhw539: true that this accounting trick weren’t the major cause of the current situation but they were a part of it. Accounting standards were supposed to be fixed (post dotcom bubble, Enron, Worldcomm, etc), yet, even today we get all kinds of shenanigans related to mark to market, misreported earning/losses, “orphan” months, misunderstood and extremely complex financial instruments, naked short selling, and almost no oversight, auditing until something goes wrong: and this AFTER trillions in bailouts. Obama didn’t cause these problems but he is supporting the banksters who use these tricks, legal or otherwise, and is still giving them money, cutting them deals, and claiming that consumers need to “spend” and allow banks/corporations to get bailed out while they suffer.
Also note that many local banks and credit unions are not in the situation as the large, national, or international banks and investment houses- that use, or invest in, entities that use these tricks. Also note that other countries have more standardized accounting and oversight and have had less (though still crisis) than the US.
Posted by: Ed | April 15, 2009, 3:20 pm 3:20 pm
There was an OLD law that lobbyists persuaded Congress to change just recently. It said they had to price their toxic assets in a mark to market pricing. The one change Congress made was that it would NOW be mark to management (their own stipulation of what it is) pricing. That means they can sell these toxic assets to us the taxpayer at inflated prices and we are stuck with the losses.
Posted by: delicado | April 15, 2009, 4:15 pm 4:15 pm
jhw539, the glas-Steagle Act enacted after the Great Depression of the 30′s to stop this type of greed from causing the economic collapse as it did this time was voted out at the end of the 90′s – saying the market can regulate itself. HAH. Then Gramm, Bliley and someone else set up even more deregulation. We lost our Anti-trust laws, which would have broken up this AIG conglomerate, before it could collapse our economy. We need regulations NOW. NOT as Geithner wants to do – his plan is to shore AIG up and with unlimited (taxpayer)funding “save it” again if it goes under. No way – we need regulation so they can stop this unlimited access to OUR monies and let them go bankrupt like anyone else.
Posted by: delicado | April 15, 2009, 4:25 pm 4:25 pm
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Posted by: Mary Bush | July 21, 2011, 11:29 am 11:29 am