Seeking Alpha

Rather than a being a financial catastrophe as the subprime mortgage mess has been for most brokerages, Goldman Sachs (GS) is raking in one of the industry's biggest profits in years thanks to a "tiny group of traders," according to a Wall Street Journal report. The group of 16 structured-products traders' bets against mortgage-backed securities are seen resulting in a profit of nearly $4 billion, according to sources familiar with Goldman's financing. The profits in turn, will offset mortgage-related losses of $1.5B to $2.0B at other divisions. The Journal explains the structured-products group's mission is to make markets for clients, but it also can invest company capital to exploit opportunities, even if the trades are in the opposite direction of clients', as in the case of subprime-mortgage securities. Goldman reports fiscal Q4 results on Tuesday and the earnings are expected to boost the firm's annual net income to more than $11B. Shares of Goldman Sachs lost 1.9% to $208.48 on Thursday.

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

This article is tagged with: Financial, Diversified Investments, Earnings, United States
About this author: