Thud: Goldman’s Deal Fizzles Right Out of the Gate

Goldman Sachs got their deal done today, but it did not work out so well for anyone but Goldman. Yes, they priced the deal “in the hole” (down from yesterdays close) but apparently did not find enough strong hands to place the stock. And their secondary offering might just mark a top in this overbought market, which will now have to snake its way through earnings season.

The past few weeks have been notable ones for the history books and for Goldman in particular....and Matthew Goldstein - who has earned my respect over the past few years - is voicing a common refrain:

....if Blankfein really wants to help U.S. taxpayers out, he can go the extra mile and give back some of that AIG money the firm got, too. If the government had allowed AIG to file for bankruptcy, Goldman likely would have incurred an even bigger fourth-quarter loss than it reported. So Blankfein owes a bit of gratitude to Uncle Sam. And as my BusinessWeek colleague Roben Farzad pointed out on CNBC on Mar. 27, Blankfein can thank taxpayers by forking over its AIG largesse.

Now we know Goldman will object that the AIG bailout money is different from TARP. The firm will argue that the dollars that passed through AIG were nothing more than money it was owed on all those credit default swaps it had purchased to insure some of its portfolio of collateralized debt obligations, or CDOs. In Goldman’s world, all the government was doing was allowing AIG to live up to its contractual agreements. But, as we have seen in this financial crisis, some contracts can be broken.

It won’t happen of course. But if you don’t like Goldman you can make your presence felt - just don’t do business with them. It will hit them right where it hurts - in their pocketbook. And for those of you who got burned today taking down a slug, I am sure you salesman will make you whole on the next hot deal. That is how they roll at 85 Broad.

Goldman, Give It All Back
Business Week
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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