Photo: Bloomberg Businessweek
The buzz this morning is all about Goldman Sachs and what was in its latest 10-Q filing.Specifically, there were interesting comments on lawsuits and losses.
First lets get to losses. According to Bloomberg, In the first 21 days of Q3, Goldman traders recorded the most losses they have had since Q4 2008. What’s worse, is that the bank has counted on that aspect of the business for 62% of its revenue since the beginning of the year.
On one day traders lost more than $100 million, though they made that much in 9 days out of the 64-day quarter.
Now for the lawsuits. Dow Jones reports that the bank estimated that it could pay as much as $2.6 billion to cover legal fees stemming from $15.8 billion worth of mortgage backed securities it sold to parties suing them right now.
Those parties include:
- Fannie Mae and Freddie Mac
- the National Credit Union Administration
- Basis Yield Alpha Fund
- the Federal Home Loan Banks of Seattle, Chicago, Indianapolis and Boston
- the Charles Schwab Corp. (SCHW)
- Cambridge Place Investment Management Inc.
- Heungkuk Life Insurance Co.
- Limited, Landesbank Baden-Wurttemberg, affiliates of Allstate, and others.
All of that said, it makes sense that Goldman is raising money right now. The bank is ready to sell 2.4 billion of its shares in the Commercial Bank of China, which could raise up to $1.54 billion, says Reuters. It’s offering the shares at $0.63 to $0.64 a share, which is about 3.7% to 6% below the latest traded price.
They also significantly reduced their exposure to French banks by 61%, from $38.5 billion down to $15.1 billion. Probably a bad sign for the French. Maybe a good move for Goldman.