BEHIND THE MONEY: Goldman Can't Let Go

Goldman Sachs shares are lower, as the rest of the financials rebound, on a Wall Street Journal story that the firm may report a loss two weeks from now of as much as $2 billion.  Something

else that may be hurting the shares is a note from Fast Money friend (and guest tonight) Brad Hintz of the objective and reputable shop Bernstein Research.

Hintz notes that Goldman's ability to profit in the past was directly linked to the amount of leverage it was able to take. Excluding certain outliers, "the correlation between gross

leverage" and return on equity is 88 percent, writes Hintz. "As a result, Bernstein expects the business models of the two surviving large-capitalization securities firms to shift more

towards the institutional banking models employed by Banker's Trust and the 'old' JP Morgan pursued in the mid 1990s."

Despite repeated assurances to the contrary (which I highlighted in this blog last month), the good old days on Wall Street are over. As Dylan Ratigan highlights repeatedly on the show, the

swinging days of 40-to-1 leverage shall never return.

Many Goldman lovers have been to reluctant to realize this, betting that the firm is still a bastion of strength in the industry. "Like Apple, there is a cadre of 'true believers' among the

Goldman Sachs equity holders," writes Hintz. He believes Goldman isn't different, rating the shares a 'market perform'.

And Hintz should know better than any of us. He used to be the CFO at Lehman Brothers.

ONE LAST NOTE: With the Big Three hearings set to begin Thursday, Ford CEO Alan Mulally, who reportedly vowed to DRIVE to the hearing this time, better get started soon. Google maps puts the

drive from Detroit to DC at nearly 9 hours, longer if Mulally, in true road-trip fashion, stops over for beers in Cleveland and Pittsburgh. We have many questions about this trip. What car

is he taking? Will he use EZ-Pass? Fast Money vows to get you these answers by tonight.    

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