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Digging deeper into Goldman's report

Tuesday, April 17, 2012 - 02:17

April 17 - Goldman Sach's quarterly earnings beat Wall Street forecasts but digger beyond the headline numbers, Goldman faces ongoing troubles stemming from bad press and new regulations. Jeanne Yurman reports.

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PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL Goldman Sachs better-than-expected quarterly earnings come at a pivotal time. Since the financial crisis in 2008 Goldman Sachs has weathered a non-stop string of negative headlines. From paying over a half billion dollars to settle claims over its role in the housing collapse, to more recently, an op-ed in the New York Times by a former employee accusing the firm of losing its moral fiber. At first glance it seems this has little harmed Goldman's business. Its stock has rebounded sharply from the lows in late 2011. And Tuesday it dished out profits of over $2 billion and raised its dividend 31 percent. Digging deeper, however, Max Wolff of Greencrest Capital, says the firm is hurting. SOUNDBITE: MAX WOLFF, SENIOR RESEARCH ANALYST, GREENCREST CAPITAL (ENGLISH) SAYING: "Revenue growth and profit growth were unspectacular and their performance against their peers and some major areas of historic dominance and strength like investment banking and fixed income trading were lack luster at best." As one of the biggest fish on Wall Street it's still a first stop for many investors. Though Boston University's Mark Williams, author of Uncontrolled Risk, a book about the Lehman collapse, says rivals are benefitting from Goldman's tarnished reputation. SOUNDBITE: MARK WILLIAMS, MASTER LECTURER, BOSTON UNIVERSITY (ENGLISH) SAYING: "Well the perception now that the Main Street perception is that Goldman itself doesn't put customers first. That's coming to Wall Street as well. We're seeing Goldman Sachs losing the Facebook deal." Bad press is just part of Goldman's struggle to rebound. It is now a bank holding company, so regulations have mostly snuffed out its lucrative proprietary trading business. New global standards require that more of its capital be kept in reserve and unlike its competitors, it has no retail customer base to lean on. Some speculate that Goldman may at some point shed its bank holding status or go private. The question, especially for investors, is what happens in between as it navigates the turbulent transition. Jeanne Yurman, Reuters.