Goldman Sachs loses $428 million in third quarter

Associated Press

NEW YORK

Goldman Sachs, the banking industry’s perpetual winner, was this quarter’s loser.

The storied investment bank lost $428 million in the third quarter, driven by sharp drops in underwriting and trading revenue brought on by the wild swings in markets this summer. Goldman also had losses from souring investments in stocks, bonds and other holdings.

The loss announced Tuesday, which was worse than analysts expected, marked just the second time that Goldman has posted a quarterly loss since going public in 1999. Other Wall Street banks also had trouble in their investment-banking divisions, but Goldman fared worse.

It’s too early to tell if the loss at Goldman Sachs Group Inc. is a temporary blip driven by a wild period in the markets or a sign of cracks in the bank’s long-held business strategies. Whatever the case, the results of the bellwether company suggest that big banks are still struggling to figure out how to navigate a new world of weaker economies and tighter government control.

“This is the best proof that the financial crisis is far from over,” said Ken Thomas, a Miami-based banking consultant.

Analysts point out that Goldman is naturally more susceptible to swings in the stock market, which has been under pressure because of fears about weak European banks and the losses they could suffer if the Greek government goes through a messy default. Those banks have large holdings of Greek bonds.