Goldman Sachs Profit Does Not Mean Crisis is Over

Yesterday Goldman Sachs, the most important financial institution on Wall Street, reported a profit for the second quarter of $3.4 billion, up a whopping 89%. The size of the profit caught many analysts by surprise, with some saying it was one of the most tangible signs that the financial crisis is nearing an end.

Despite Goldman’s stellar quarter, the results of other banks are less encouraging. Georges Ugeux, Chairman of Galileo Global Advisors, is of the opinion that to assess the recovery of financial system we must evaluated health of commercial banks, not investment banks.

“To see if the financial system was repaired, we must analyze the impact of the crisis at banks that are engaged in private credits”, says Ugeux. “The bank results may be less encouraging.”

One example is CIT Group, which today is struggling with bankruptcy. For this reason, the financial results of JP Morgan and Morgan Stanley this week will be more telling.

Chairman of Galileo Global Advisors, Ugeux is Dr. in Law and Bachelor of Economics at the Catholic University of Louvain in Belgium. He was a banker at Societe Generale, Morgan Stanley, Kidder Peabody, President of the European Investment Fund and Chairman of International Division NYSE. Galileo Global Advisors is a bank and consulting business founded by him.