Goldman Shrugs Off Subprime

If the subprime mortgage meltdown is going to trip up the white-shoe firms on Wall Street, there's no sign of it in Goldman Sachs' (GS Quote) first-quarter numbers.

The New York-based investment bank sailed past the Street's expectations Tuesday morning, ringing up earnings of $3.2 billion, or $6.67 a share, for the quarter ended Feb. 23.

Bank analyst Michael Mayo at Newark, N.J.-based Prudential Equity Group says the results show that "subprime issues did not hurt Goldman, especially since they have never bought a mortgage originator." In that regard, Goldman stands in stark contrast to many of its peers. Morgan Stanley (MS Quote), for instance, acquired mortgage origination firm Saxon Capital in August.

Another New York-based banking analyst who declines to be identified says that Goldman, like many investment banking shops, has a diversified business that was able to offset any losses the company may have incurred in its subprime business.

"I think the message here is that [Goldman] has a very diversified fixed income business," the New York analyst says. A Goldman spokesman did not immediately return a call for comment.

Investors have been keeping an eye on the subprime meltdown because selling mortgage-backed securities has been a lucrative business on Wall Street. Shares in lenders such as New Century (NEW Quote), NovaStar (NFI Quote) and Accredited Home (LEND Quote) have plunged as defaults and delinquencies rise among homebuyers with weak credit histories.

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