Nouriel Roubini wrote in March that Goldman Sachs was insolvent:
So for the Treasury to hide behind the “systemic risk” excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.
Yet Goldman reported a $1.7 billion dollar profit for last quarter.
How did Goldman do it?
Well, as Floyd Norris – chief financial correspondent for the New York Times – explains, Goldman simply didn’t report results for December 2008, a month in which it took huge write-downs.
Its easy to look profitable when you can cook the books . . .
Update: Congressman Grayson is talking about this as well.