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 Looks like things are back to normal, or perhaps even better, at Goldman Sachs Group Inc. (NYSE:GS) as the firm is reportedly on track to pay out its largest bonus pool in the firm's 140-year history thanks to soaring profits in the first half of 2009. With less competition coupled with reigned-in risk-taking among the largest global banks, Goldman has evidently been able to capitalize on the uncertain financial environment. According to the U.K.'s Guardian, Goldman has reputedly benefited greatly from less competition "and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm." In spite of Goldman repaying its $10 billion in capital from the Troubled Asset Relief Program, there may be some strings left from its bailout that could trip up the bank's bonus gravy train. Goldman still has to work out a price at which to buy back the warrants that the Treasury Department received when it gave the bank $10 billion in TARP money. The government's ownership of the warrants could leave Goldman still under the auspices of the TARP's compensation restrictions. A recent analysis of the warrants rendered a wide range for what their value might be. Linus Wilson of the University of Louisiana estimated the warrants could be worth between $250 million and $1.2 billion. There have been calls for banks to pay full market value for the warrants, but the banks have pushed back on that, particularly those like J.P. Morgan Chase & Co. (NYSE:JPM) that didn't want the TARP money in the first place. With Goldman reporting blockbuster profits, there will be even more pressure on Treasury Secretary Timothy Geithner to drive a hard bargain on any buyout. Unlikely to come up when bonuses get paid out is Goldman's phantom month of December 2008. Due to an accounting calendar change when Goldman became a bank holding company, December's results weren't included in bank's first-quarter filings. Goldman ended up reporting a $1.3 billion pretax loss for the month, whicht didn't count against the $1.8 billion in first-quarter profits it reported for January 2009 to March 2009. - George White See Dealscape post on Wall Street bonuses See Guardian story See Dealscape post on TARP repayment See story on Goldman warrants See Dealscape story Goldman earnings
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