Funny.

Lune,

Ah, that one should have occurred to me….Guess I have fallen for the idea that those newly emboldened accountants would make all the firms come clean in their audited financials.

So far, Goldman acts as if it is, well, golden. For example, a Bloomberg story yesterday noted:

Goldman, the biggest and most profitable U.S. securities firm, set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of 2007, according to the company’s third-quarter earnings report. The stock market values Bear Stearns Cos., the fifth-biggest firm, at $14.7 billion. Bonuses, the majority of Wall Street compensation, are typically paid after the fiscal year ends this month.

Personally, I can’t believe that Goldman is making out like a bandit when the rest of the industry is falling apart. We had pointed out earlier that Goldman has the highest percentage of assets on its balance sheet of any Wall Street firm. Bernard, who comments here from time to time, noted over at Nouriel Roubini’s blog that Goldman’s Level 3 assets were 185% of equity (Morgan Stanley has the highest ratio, at 251% of equity).

Goldman is well managed, so I am willing to concede that they could well have avoided the self-inflicted wounds of other firms, since many of the things they did were collossally stupid (like Merrill hanging on to unsold CDO underwritings, or Citi taking the novel and self destructive step of creating CDOs with CP that they underwrote, meaning they would have to buy it if the CDO entity couldn’t roll it). Similarly, at least in the past, dealers have been unable to avoid being net long bonds in a falling market (although Goldman reports that it made big profits on bets that mortgage securities would fall, presumably more than offsetting inventory losses).

It’s enough to make you believe the conspiracy theorists, that the firm is getting tip-offs on policy moves from its friends in the Treasury Department. Or maybe it just has a way to keep from revaluing its Level 3 assets.