Where's My Pitchfork?

At a time when economic news, including today's report on retail sales, has dampened hopes of a recovery this year and raised the near-certainty of double-digit unemployment, we can all comfort ourselves with the great success of Goldman Sachs:

Comfortably beating analysts’ forecasts, Goldman Sachs earned second-quarter net profits of $3.44 billion, or $4.93 a share, the bank announced on Tuesday.

The results continue a robust turnaround for the firm since it rode out the final tumultuous months of last year with the aid of a federal rescue. They come just one month after it paid back its $10 billion in federal aid.

Goldman’s profit was lifted by record quarterly revenue of $6.8 billion in its fixed income, currency and commodities unit, where mortgage and other credit instruments are traded, the bank said in a statement. This business has performed well since the bank has taken on greater levels of risk since the end of last year.

Its equity underwriting business also generated record net revenue, worth $736 million in the second quarter, it said, as Goldman benefited among other things from a rush by other troubled banks to issue shares and raise their capital levels.

“We are performing well across the board,” said David A. Viniar, chief financial officer, who said the strong performance reflected “blocking and tackling every day” by Goldman’s employees.

Glenn Greenwald ably details the extraordinary actions taken on behalf of Goldman Sachs during the financial crisis right on through until today, so I need not repeat them. Even if they had not done so, Goldman would be in an excellent position to capitalize on the failures of other firms because of the implosion of Lehman Brothers and Bear Stearns - their competition has been euthanized, essentially. But that wasn't enough. They were allowed to change themselves into a bank holding company to qualify for Federal Reserve largesse. They received billions in federal money passed through AIG to pay off on their credit default swaps, putting them in a better position that any other US financial institution. They used their contacts throughout government to get favorable terms and handouts in virtually every program aimed at rescuing the financial system.

And to this day, the Treasury Department refuses to answer Congressional queries about accepting the recommendations of bailout auditors, nor will the Federal Reserve divulge the whereabouts of the trillions of dollars in funds they've let out since last September. I have a feeling that we'd throw an even bigger fit if we had more transparency. But what is already known, frankly, is enough.

In a related story, like everyone else I recommend Michael Lewis' article on AIG and Joseph Cassano in Vanity Fair. It focuses on understanding the past crisis rather than the credibility crisis we now face as a consequence of bailing out banks over people, but it's worth reading.