Big Expectations at Goldman

Over the past month, many subprime lenders have seen shares crumble as delinquencies and defaults have picked up among homebuyers with weak credit histories. Investors have been worrying that some lenders might go under. New Century Financial(NEW Quote) and Fremont General(FMT Quote) have stopped making new loans as credit dries up.

Guy Moszkowski, an analyst at Merrill Lynch, cut his ratings on Goldman Sachs, Lehman and Bear Stearns two weeks ago to neutral.

"It appears the industry is exiting the first quarter on a downtrend, with pressure on the mortgage market now being exacerbated by deteriorating risk appetites elsewhere," including emerging markets and U.S. corporate high yield and investment grade debt, he writes.

Goldman is first out of the gate on Tuesday. Wall Street expects the firm to make $4.90 a share, down from the year-ago $5.08, on revenue of $10.7 billion. Analysts say the brokerage titan is the least of the four exposed to potential subprime problems -- partially because it has not bought an originator.

But even if brokers have problems from subprime exposure, it will be difficult to ferret out, observers say. Most brokers do not disclose their subprime loan losses or any losses associated with the trading of the securities backed by subprime mortgages. It will also be difficult to tell if the exposure to these risky loans shows up in other areas of the businesses.