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Mortgage Trouble Rattles Wall Street

Bear Stearns, Goldman earnings reflect subprime bloodbath

By J. Kelman,  Newser User

Posted Jun 14, 2007 10:54 AM CDT
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(Newser) – Bear Stearns posted a 10% drop in quarterly earnings today, the latest victim of the subprime collapse. The country's second-largest mortgage-bond underwriter posted profits well below expectations, down nearly 33% from last year to $362 million. Goldman Sachs escaped bruised but more-or-less unscathed, with profits up 1% on the strength of its banking division.

Bear Stearns' fixed-income revenue, down 21%, makes up nearly half of the bank's income, Bloomberg reports. That's left them far more vulnerable than competitors such as Goldman, which covered a 24% drop in fixed-income earnings with gains in investment banking and equity trading. But even usually unflappable Goldman has been rattled: Shares are down 3% in mid-morning trading.

The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007. Goldman Sachs Group Inc., the nation's largest investment bank, on Thursday, June 14, 2007 reported its second-quarter profit edged higher as a surge in investment banking activity helped offset weakness...
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007. Goldman Sachs Group Inc., the nation's largest investment bank, on Thursday,...   (Associated Press)
A for sale sign sits in front of a home on a quiet street in Walpole, Mass., in this Dec. 28, 2006 file photo. Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market,...
A for sale sign sits in front of a home on a quiet street in Walpole, Mass., in this Dec. 28, 2006 file photo. Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting...   (Associated Press)
The headquarters for securities firm Bear Stearns is shown March 16, 2006 in a New York file photo. Bear Stearns Cos., the fifth-biggest U.S. investment bank, said Thursday, June 14, 2007 fiscal second-quarter profit sank as a downturn in the U.S. mortgage market slammed the company's business of...
The headquarters for securities firm Bear Stearns is shown March 16, 2006 in a New York file photo. Bear Stearns Cos., the fifth-biggest U.S. investment bank, said Thursday, June 14, 2007 fiscal second-quarter...   (Associated Press)
Bear Stearns Fined $250 Million Over Questionable Trades
Bear Stearns Fined $250 Million Over Questionable Trades   (Getty Images)
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007. Goldman Sachs Group Inc., the nation's largest investment bank, on Thursday, June 14, 2007 reported its second-quarter profit edged higher as a surge in investment banking activity helped offset weakness...
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007. Goldman Sachs Group Inc., the nation's largest investment bank, on Thursday,...   (Associated Press)
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Goldman Sachs • subprime mortgages • business • Bear Stearns • earnings reports • finance • equity trading • US economy • investment banks

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