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The Institutional Risk Analyst

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RKT Sinks, UWMC Wobbles, RITM Treads Water & Goldman Doubles Down

Updated: Mar 4, 2023


"For the first time in more than two decades, some of the world’s most risk-free securities are delivering bigger payouts than a 60/40 portfolio of stocks and bonds."


Bloomberg


March 2, 2023 | Premium Service | This week, Goldman Sachs (GS) CEO David Solomon as much as agreed with our analysis of the past several years and suggested that the loss-leading consumer banking business may be sold. Some observers are suggesting Solomon may likewise head for the door, but with $25 million in compensation for 2022.


Going through the investor materials from GS this week, the amount of actual substance in the documents seems to have declined to a new low, while marketing hype and general statements now predominate. There is little actual objective information for investors in much of the GS marketing materials.


As Solomon and his colleagues admitted at the investor day, GS is a securities dealer first and foremost and has no comparative advantage as a bank. Funding costs are too high. Meanwhile, as discussed below, even as Solomon backs away from the retail strategy and related credit expenses, GS is adding new C&I exposure in residential mortgage and Ginnie Mae.

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