If there’s any bank that’s benefiting from the issues that Goldman Sachs (NYSE: GS) is having, it’s JP Morgan Chase & Co (NYSE: JPM), at least that’s what one Bloomberg columnist believes.
David Reilly recently penned a column arguing that Goldman Sachs is indirectly protecting JP Morgan from the prying eyes of the stock market. He believes that since the market is busy finding faults with Goldman Sachs, it’s largely ignoring JP Morgan Chase in the process.
During March of 2008, JP Morgan Chase rescued Bear Sterns, helping JP Morgan win a lot of derivative contracts in the process. The market has largely forgotten the Federal Reserve’s agreement to backstop losses related to $29 billion worth of Bear Stern’s problem assets once JP Morgan had written down $1 billion in losses. As of October 1st, those assets were worth $26.14 billion, meaning that taxpayers have lost more than $2 billion from JP Morgan Chase.
Goldman Sachs has set aside nearly $17 billion year-to-date for compensation, which has not bode well with its shareholders. However, in 2008 1,114 JP Morgan employees received bonuses of $1 million or more whereas only 953 Goldman Sachs employees received a similar bonus. JP Morgan’s top-four bonus recipients received a combined $74.8 million, far more than Goldman Sachs’ top four bonuses that totaled $45.9 million.
In his column, Reilly concluded that, “The end result: JPMorgan, looking like a Boy Scout, gets the last laugh as the pitchfork-wielding crowds bay for Goldman’s blood.”
