Goldman Sachs mystery?

Not that fishy. The way that all these ibanks went under is with the repo market. Basically, these guys have long term assets, take your pick of what is being written down. But they funded these assets with a lot of short term borrowings (i.e., the repo market). Historically, it was cheaper to do so. While not the same as the typical commercial bank that lends out long term at 6% and pays ST deposits at 2-3%, it's not too different either. However, when people get nervous, no one wants to lend ST to the ibanks. The repo market dries up and they are unable to meet near term cash flow needs. The problem spirals and soon you have Lehman Brothers. So GS shoring up its capital is consistent with this. Even if they don't have any major issues with their balance sheet, they want to send a very strong signal that there is absolutely no problem- what better way than to raise $5bn through Buffett and another $5bn in public markets. Basically, it's a pre-emptive strike to make sure their repo/ST sources of liquidity are intact.

Ok. But revising their standing from ibank to bank is desperate. Why bring on the regulation
if everything is fine. Sure they want deposits for ballast but after this shakeout wouldn't it be more profitable to continue as an ibank with fewer competitors?

the market basically demanded it, so they did it

"Even if they don't have any major issues with their balance sheet, they want to send a very strong signal that there is absolutely no problem- what better way than to raise $5bn through Buffett and another $5bn in public markets."

Doesn't that send a very strong signal that there is a huge problem?

Still, I don't feel anyone has answered the question. How could they not know they were in trouble months ago when they were claiming publicly everything was great and all of a sudden they are on the brink of failure.

there isn't necesarily anything wrong with their business, but they are a public company and have to worry about their stock price, the market is running scared and imo overreacting and being irrational. Months ago they did not know the market was going to go insane on them. All they are doing is reassuring the market's confidence, and bolstering their capital base in the event of trouble.

Ok. But I think they were trying to bluff there way through it assuming like most of us that things would blow over until it became apparent that that was no longer a viable option.

They all lied, people believe what they want to hear. Tell them everything is great and very few have the ability, to recognize when people are ling. Just like this bailout. They are telling you this will save the system from complete meltdown, but they are not telling you that they actually have no idea. What's to say once the Banks rid themselves from this "garbage" they just don't hoard the cash. If things are as bad as they are saying then that would be a logical outcome and this $700B will be just a way to put the tax payer on the hook for decades to come.

They (Wall Street) has lied from the beginning and now we are suppose to believe there BS. I'm not buying it. I actually don't think this will help at all. What happens when housing falls another 20%, remember certain portions of this country are just staring their decent. We're talking trillions more.

The standalone IB model is threatened, not Goldman Sachs...

In addition, in changing to a Bank Holding Company they will require more capital so they went ahead and did this to shore up that expansion into Commercial Bank Land

Lastly, the Credit Rating Agencies have all of sudden found religion and are downgrading everything left and right...

GS did not warehouse and keep the junk they orginated on their BS as much as Lehman, Merrill and Bear did....

Stop writing Sherlock Holmes novels, stupid!

It's really more of a Grisham.