Goldman’s good fortune cannot be explained by luck alone. Late last year, as the markets roared along, David A. Viniar, Goldman’s chief financial officer, called a “mortgage risk” meeting in his meticulous 30th-floor office in Lower Manhattan.I suspect billions of dollars in government bailout funds were more important than luck or skill or anything else.
And I don't think it hurt that their former CEO, Henry Paulson, was in charge of doling out the bailout cash.
People are excited that Wells Fargo is reporting higher than expected profits.
Unfortunately, Wells Fargo can be insolvent and still report profits. It's a rather lame situation but it is true. In fact, most of the big investment banks were insolvent when they were paying out huge bonuses to the top dogs. They had very risky loans but they pretended (either by lying to themselves or by buying insurance from AIG) that the loans were not risky and booked big profits based on it.
I wouldn't get too excited if the banks are "suddenly" making money. The next round of loan defaults - either prime loans or credit card backed securities - will kick them in the teeth again.
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