Goldman's Giant Bonus PR Headache

Johnathan Berr

posted: 43 DAYS 9 HOURS AGO

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Goldman Sachs Group Inc. (GS) faces a gargantuan public relations headache when it reports third quarter results Wednesday.

Investors will be angry if the New York-based bank fails to hit Wall Street's consensus of earnings of $4.24 per share on revenue of $11.02 billion, or if it does not give bullish enough guidance. The Obama administration and members of Congress, on the other hand, will be furious if Goldman Sachs' earnings are too good. They will wonder how much of its success was the result of the $10 billion in TARP funds that it received and has since repaid. Goldman also benefited from the government's bailout of American International Group Inc. (AIG).

Arguments over Wall Street compensation open a can of worms that many on Wall Street and Capitol Hill would rather avoid. Citigroup Inc. (C) last week agreed to sell its Phibro commodities trading business in order to avoid a $100 million payout to superstar trader Andrew Hall. Legal challenges are possible from bankers as government pay czar Kenneth Feinberg reviews the practices of banks that have received bailouts.

2009-10-12 14:33:29