Goldman Up Whopping 76% in 3rd Quarter

Bear Stearns drops 61% on mortgage fund losses
By Kevin Spak,  Newser Staff
Posted Sep 20, 2007 10:20 AM CDT
The headquarters of investment firm Goldman Sachs towers over smaller buildings in New York in this Dec. 11, 2006 file photo. The FBI is investigating anonymous threats against the firm contained in handwritten...   (Associated Press)
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(Newser) – Two financial giants posted dramatic earnings this morning: Goldman Sachs wowed investors with a 79% surge in third quarter net income, while Bear Stearns’ dropped 61% thanks to massive hedge-fund losses. The two were on opposite sides of the subprime collapse. Bear Stearns is among the top packagers of mortgage-based securities, which Goldman short-sold for huge gains.

Goldman’s return on equity, which measures how efficiently funds reinvest earnings, rose to 36.6% from 31.6%, while Stearns’ plummeted to 5.3% from 13.7%, reports the Wall Street Journal. Stearns lost almost $200 million this summer when two of its hedge funds imploded. Goldman, meanwhile, lost $1.48 billion on junk-bonds, but offset that with the $2.15 billion sale of Horizon Wind Energy.