For a brief, startling moment, it looked as though Goldman Sachs (GS) might be brought down to the level of the rest of Wall Street. That moment has now come and gone.
With a strong, profitable quarter and the announcement of a brilliantly timed equity offering, Goldman Sachs (GS) will soon be free the TARP shackles that temporarily dragged the firm into the disgraced Wall Street mud.
Once Goldman’s TARP is paid off, every talented bulge-bracket banker at every other big TARP firm–Morgan Stanley, Bank of America, Citigroup, Merrill Lynch–will line up around the block to work at Goldman Sachs. Goldman will have its pick of the talent and the clients, as the world’s best bankers get sick of working for Congress-approved chicken feed, and the world’s most lucrative fee-paying corporations and investors get sick of doing business with companies that get raked over the coals every day in the outraged press.
If the stock market crashes again, and takes the financials down again with it, Goldman will have seized a perfect moment to buy its way out from under government slavery–another spectacularly profitable trade, with Goldman on the winning end and the rest of Wall Street explaining to shareholders where it went wrong.
Goldman Sachs booked $1.7 billion of profit last quarter and set aside $4.7 billion for compensation. At Goldman, therefore, if nowhere else on Wall Street, rumours about the death of the good old days have been exaggerated, and happy days are here again.