Mortgage Trouble Rattles Wall Street

Bear Stearns, Goldman earnings reflect subprime bloodbath
By J. Kelman,  Newser User
Posted Jun 14, 2007 10:54 AM CDT
Mortgage Trouble Rattles Wall Street
The building on Broad Street in New York's Financial District that houses brokerage firm Goldman Sachs, Tuesday, June 12, 2007. Goldman Sachs Group Inc., the nation's largest investment bank, on Thursday, June 14, 2007 reported its second-quarter profit edged higher as a surge in investment banking...   (Associated Press)

Bear Stearns posted a 10% drop in quarterly earnings today, the latest victim of the subprime collapse. The country's second-largest mortgage-bond underwriter posted profits well below expectations, down nearly 33% from last year to $362 million. Goldman Sachs escaped bruised but more-or-less unscathed, with profits up 1% on the strength of its banking division.

Bear Stearns' fixed-income revenue, down 21%, makes up nearly half of the bank's income, Bloomberg reports. That's left them far more vulnerable than competitors such as Goldman, which covered a 24% drop in fixed-income earnings with gains in investment banking and equity trading. But even usually unflappable Goldman has been rattled: Shares are down 3% in mid-morning trading. (More Bear Stearns stories.)

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