Commentaries

Now raising intellectual capital

It’s not all golden at Goldman

It’s hard to find much to quibble about with Goldman Sachs’ second-quarter performance–at least from a dollars perspective.

You just don’t expect to find many landmines in a 10Q, when an investment firm manages to take in more than $100 million in revenues from trading on 46 days. 

But there was one little hiccup for Goldman buried in its most recent quarterly report and that involves its Level 3 treatment of derivatives. Level 3, of course, is the category banks use for assets deemed too hard-to-value and all but untradeable. And at the end of June, Goldman reported having $15 billion in derivatives contracts that were classified as Level 3.

Overall, untradeable derivatives accounted for 27% of the $54 billion in Level 3 assets at Goldman in quarter two. And on fair value basis, Level 3 derivatives accounted for nearly 7% of the dollar value of all of the firm’s derivative contracts.

  •