A Tale of Two Banks
Goldman Sachs announced third-quarter earnings today and, as expected, Lloyd Blankfein has good reason to smile. The firm raked in $3.1 billion in profits, which was three times what the bank made during the same period in 2008. And Goldman bonuses will set a new record when they're doled out in a few months: A whopping $5.25 billion was set aside this quarter alone to pay for them. (As several people predicted, the firm also announced it was putting a big chuck of money—$200 million—into its foundation this quarter in what appears to be an attempt to counter negative press over the big bonuses.) But travel a few miles north from Goldman HQ to the offices of Citigroup CEO Vikram Pandit and the mood isn't as cheery.
Citigroup announced third-quarter earnings today, too, reporting a per-share loss after suffering another $8 billion in credit losses. But it wasn't as bad as analysts had been predicting, so that's good news! And Citi massaged the numbers a bit to make them seem better than they really were—thus enabling the bank to technically say that it generated a modest profit for the quarter—and which only managed to confuse things. ("It can give you brain damage trying to figure this out," said one portfolio manager.)
And neither bit of news did much to boost the market. Oh, well. At least it's really warm and sunny outside, right? Right?
Goldman Earns $3.1 Billion in 3rd Quarter [NYT]
Goldman Sachs Profit Climbs on Strong Trading Operations [WSJ]
Citigroup Reports a Per-Share 3rd-Quarter Loss [NYT]
Citigroup Takes $8 Billion in Credit Losses [Reuters]