Goldman Sachs Is Set to Reap $200 Million Profit Off of Texas Disaster
And millions of Texans are still suffering.
It looks like Goldman Sachs will bring in a $200 million windfalls from the ice storms in Texas last month and all of the destruction that they reaped. This as the Wall Street firm undergoes a major management shift.
According to a report in the New York Times, in two years as CEO David M. Solomon has overseen the departure of nine of Goldman Sachs’ top executives, four of whom have left since the start of 2021. This, the paper says, represents a major shift in the culture of a firm which prides itself in stability at the top.
The Times said that many lower level managers have left too. It cites as the reason an insider who said that Solomon wants Goldman to become more like a typical corporation. These changes have been good for Goldman Sachs’ investors as its stock is now trading at an all-time high of $330.
“The firm is well on its way to meeting the goals we set, and investors seem to appreciate the changes, the greater transparency, and the clear direction we’ve put in place,” said Jake Siewert, a Goldman spokesman. “It’s an important part of Goldman tradition for partners to leave for a wide range of new pursuits, and we wish them well.”
As for Texas, Bloomberg reported on how Goldman Sachs is one of several Wall Street firms making money off of its winter disaster. Goldman specifically will make more than $200 million from the sale of power and natural gas and from financial hedges. This is because prices for such commodities went up all over America as a result of the power outages in Texas. Morgan and Bank of America Corp. also stand to make a lot of money too.
The deep freeze in Texas not only caused an emergency need for oil and gas in the state, but also affected its oil production, cutting supplies. This was good news for Wall Street, if not for anyone else. The people who suffered sub-freezing temperatures with no electricity and no source of heating, who had no clean drinking water, and whose businesses suffered greatly after a year of losses caused by the Coronavirus crisis, will not be getting in on any of the corporate windfalls.
“The polar vortex drove volatility in energy markets, and, as a market-maker and liquidity provider, we were positioned to help our clients manage their risks in that challenging environment,” Maeve DuVally, a Goldman Sachs spokeswoman, said in a statement. But the firm had nothing to say about how its good fortune came as a result of such bad fortune for millions.
However, financial observers point out that the Wall Street firms will be lucky to collect on half of their expected gains. This is because many energy companies are going under because of the winter crisis; That and the Covid crisis. Many are expected to go into default and so bankruptcy receivers will need to make the final decisions on who will get paid what.