Goldman Cashes In on Banks' Misery - TheStreet

Goldman Sachs

(GS) - Get Report

has grown adept at making lemonade out of the lemon that is today's financial services industry.

Wachovia

(WB) - Get Report

recently disclosed that it hired Goldman to help it figure out what to do with its giant portfolio of troubled loans. The firm also has also been the go-to advisor when it comes to helping struggling banks raise equity, working with banks like Wachovia,

Royal Bank of Scotland

(RBS) - Get Report

and

State Street

(STT) - Get Report

to raise money amid the stubborn housing and credit slump.

Goldman, already standing out by continuing to earn quarterly profits while its main rivals are bleeding from wounds inflicted by the U.S. mortgage market, appears to be doing an exceptionally good job of making money by helping financial companies dig out of the mess they've found themselves in.

Goldman has earned an estimated $596.93 million this year by raising equity for financial companies, according to figures prepared for TheStreet.com by the data firm Dealogic. That figure, boosted by Goldman's share of the $550.21 million in fees split by eight firms in

Visa's

(V) - Get Report

March initial public offering, compares to $161.34 million last year. It's also at least $110 million more than the firm's closest rival,

Citigroup

(C) - Get Report

, which earned $481.13. It could not be determined whether Citigroup's total got an artificial boost from the $8.4 billion in common and convertible equity it raised for itself this year.

"Goldman Sachs is proud of the role we have played in helping financial institutions to weather these difficult market conditions," Goldman spokesman Michael DuVally says.

Late last year, David Solomon, Goldman's co-head of investment banking, told

Institutional Investor

magazine the firm was directing resources toward assisting financial companies struggling with the credit crisis.

The firm has found plenty of work, as banks and other financial companies report massive writedowns and losses tied to the flagging mortgage market. Goldman's accomplishment is especially impressive because two of its biggest deals don't even show up in the Dealogic data. Goldman helped

Washington Mutual

(WM) - Get Report

raise $7 billion from

TPG

and assisted

National City

in attracting $7 billion from a group of investors led by private equity firm

Corsair Capital

, but those deals, while earning Goldman fees, were not included in the Dealogic figure, due to the way they were structured.

One former banker estimates Goldman earned at least 3% from those deals, or $315 million, since it would have split the fees for WaMu with

Lehman Brothers

(LEH)

, which also worked on the deal.

If

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

see their shares plummet on investor concerns that they will require a government bailout, don't be surprised to see these government-sponsored mortgage giants turn to Goldman for help. Goldman and Lehman helped Freddie raise $6 billion in preferred stock late last year.