Suddenly all Americans banks – amongst others – start posting good first quarter figures. After Wells Fargo pre-announced last week, it’s now up to Goldman Sachs to drum good news: a 1.7 bln USD profit, 4.7 bln USD set aside for salaries and bonuses and a 5 bln USD equity offering to free itself from the TARP. With 12 trln handouts fro the US government there cannot be a problem to finds money for this placement in order to let the bonuses flow again.
I suppose that’s the reason why GS prefers to pay back the government first instead of Warren Buffet.
You have to love these Goldman Sachs boys
On those quarterly results – this is the press release from Well Fargo:
“Business momentum in the quarter reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results — $100 billion in mortgage originations, with a 41 percent increase in the unclosed application pipeline to $100 billion at quarter end, an indication of strong second quarter mortgage originations,” said Chief Financial Officer Howard Atkins.
Mortgage originations… thank you, US government.
But there is more. Since January 1, 2009 new accounting rules are in force. This is rule FAS 160 which allows certain liabilities to shift to the asset side of the balance as non-cash transactions via paid-in capital, thereby going into the earnings accounts and boosting reported equity.
There you have it: the government is handing out capital injections and changes the fair value accounting rules and suddenly the visibility on the bank books is reduced to something close to zero.
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I suppose that’s the reason why GS prefers to pay back the government first instead of Warren Buffet.
You have to love these Goldman Sachs boys
On those quarterly results – this is the press release from Well Fargo:
“Business momentum in the quarter reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results — $100 billion in mortgage originations, with a 41 percent increase in the unclosed application pipeline to $100 billion at quarter end, an indication of strong second quarter mortgage originations,” said Chief Financial Officer Howard Atkins.
Mortgage originations… thank you, US government.
But there is more. Since January 1, 2009 new accounting rules are in force. This is rule FAS 160 which allows certain liabilities to shift to the asset side of the balance as non-cash transactions via paid-in capital, thereby going into the earnings accounts and boosting reported equity.
There you have it: the government is handing out capital injections and changes the fair value accounting rules and suddenly the visibility on the bank books is reduced to something close to zero.
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