Goldman's Secret to Success a Mystery

Goldman Sachs (GS) has made it through the financial crisis with its reputation largely intact, but trying to figure out the secret of the bank's success remains as difficult as ever.

Goldman was among the first large U.S. banks to indicate its desire to repay the $10 billion preferred equity stake it got from the U.S. government last year, and is now said to have formally applied to regulators for permission to do so.

After a highly unusual money-losing fourth quarter, Goldman had stellar first-quarter earnings results, largely on the back of strong results in a division it calls fixed income currencies and commodities (FICC).

Other banks , including Bank of America (BAC), JPMorgan Chase (JPM), Morgan Stanley (MS) and Citigroup (C) had strong results in FICC, but Goldman stood out with $6.6 billion in revenues, shattering the bank's previous record by 34%.

During Goldman's earnings call, Credit Suisse analyst Howard Chen asked Goldman CFO David Viniar about the sustainability of revenues in FICC.

Viniar gave the right answer: "You know me well enough, and everyone knows me well enough to know that I would never use the words 'sustainability' and 'revenues' in the same sentence. Our revenues kind of start every day."

However, he then pointed out that revenues were evenly spread throughout all the different business segments and that Goldman's FICC division has performed well in a variety of cycles.

In other words, they won't tell us how they did it, but they are consistent and they always do it. And Goldman expects investors to accept that on little more than blind faith.