) -- Now that

Goldman Sachs

(GS) - Get Report

appears to have the U.S. government off its back, it must address equally pressing questions about its long-term future.

Goldman Sachs CEO Lloyd Blankfein

Trading has been the most rapidly growing business at Goldman for the past decade or so, but it is hard to see how that growth can continue at the same rate in the face of tougher capital requirements from regulators, according to Brad Hintz, analyst at Bernstein Research.

Private equity, another area of big investment for Goldman, will have to be sharply reduced once President Obama signs the financial reform legislation that passed Congress last week

"For too long Goldman Sachs has been taking the position that 'nothing has changed in our business model' and when you look at the regulations, very clearly something has changed in your business model," Hintz says.

Cost cutting and reduced growth expectations are two likely results for Goldman Sachs trading desks. Over the long term, however, Hintz says Goldman will face increasing questions over what to do with excess capital that it no longer makes sense to re-invest in trading.

Buybacks are likely, given that Goldman executives thought the company's shares were cheap enough to buy above the $170 mark in the first quarter, and they fell below $130 at the start of this month before rebounding last week on news of the settlement of civil fraud charges brought by the Securities and Exchange Commission.

Hintz also believes a higher dividend is likely to be popular with Goldman executives, since an ever-greater portion of their compensation is both equity-based and subject to long lock-up periods. A dividend would allow them to avoid having so much of their wealth tied up in the stock.

Another interesting possibility is an acquisition. Hintz thinks asset management is the most likely area for such a deal.

"Goldman has a good asset management business but asset management's a pretty attractive business and they continually talk about how they want to grow in asset management so, properly priced asset management might make sense."

Hintz believes a deal with

Federated Investors

(FII) - Get Report

would be "a match made in heaven," since both institutions have large money-markets businesses. Others that have been rumored from time to time, he says, include

Northern Trust

(NTRS) - Get Report


Wilmington Trust Corp.

( WL), and

State Street Corp.

(STT) - Get Report

, though Hintz thinks a Goldman-State Street combination would create too large an institution to meet regulatory approvals.

As for Tuesday's results, few if any analysts expect Goldman to buck the trend of poor second-quarter trading results demonstrated last week by

JPMorgan Chase

(JPM) - Get Report


Bank of America

(BAC) - Get Report



(C) - Get Report


Analysts surveyed by

Thomson Reuters

are looking for Goldman to earn $2.00 per share on revenues of just under $9 billion in the June period It would not be a surprise though to see the numbers come in slightly lower than that, since not all the analysts have gotten around to revising earnings downward to reflect the $550 million Goldman will pay to settle its case with the SEC.


Written by Dan Freed in New York


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