Goldman May See $2B Fourth Quarter Loss

Credit downgrades key catalyst in Wall Street titan's loss of value
By Clay Dillow,  Newser Staff
Posted Dec 2, 2008 7:39 AM CST
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007.   (AP Photo/Richard Drew)
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(Newser) – After dodging many of the bullets that left its Wall Street peers wounded or dead, Goldman Sachs faces a net loss of up to $2 billion for the fourth quarter, the Wall Street Journal reports. The loss of $5 per share is five times worse than analysts feared as the firm deals with writedowns across its portfolio. Shares plunged $13.23, or 17%, yesterday.

Goldman, which registered as a commercial bank earlier this year, is hurting from the downgrading of many troubled, once-profitable debt securities. Credit downgrades on these risky investments, which include mortgage-backed securities and corporate debt, have forced Goldman to keep more capital on hand. The Treasury’s decision not to buy troubled assets from banks as originally planned has further depressed the value of toxic securities.