How Goldman Posted a Profitable Quarter: They “Skipped” December

Washington’s Blog
Thursday, April 16, 2009

Nouriel Roubini wrote in March that Goldman Sachs was insolvent:

So for the Treasury to hide behind the “systemic risk” excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.

Yet Goldman reported a $1.7 billion dollar profit for last quarter.

How did Goldman do it?

Well, as Floyd Norris – chief financial correspondent for the New York Times – explains, Goldman simply didn’t report results for December 2008, a month in which it took huge write-downs.

Its easy to look profitable when you can cook the books . . .

Update: Congressman Grayson is talking about this as well.

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