Is the Tide Turning for Goldman Sachs?

The bank's streak of bad press continues, but there are signs that blame is shifting to the regulators

Just when you thought Goldman Sachs had squeezed out the last drop of ire from the press, it rattles pundits again. Rumors that it's set to make $1 billion in profit if CIT--a lender to middle-sized companies--goes belly-up has some financial analysts pounding the table again. The bankruptcy would cost taxpayers $2.3 billion. This kind of profit-making at taxpayer cost is, many argue, the behavior that has made Goldman the most-loathed Wall Street villain of the recession.

But there are inklings of improvement. Although there are few outright defenders of Goldman Sachs, many pundits are responding to this news with a softer touch. While they lament the loss to taxpayers, they are giving more flack to the regulators responsible for overseeing the banking giant.

• Taxpayers Didn't Get Guarantees, laments Henry Blodget at Business Insider. "As if we needed yet another example of how the taxpayer should have been better protected when bailing out Wall Street last fall...If CIT goes bust, Goldman Sachs will get a $1 billion 'make-whole' payment for an earlier emergency capital infusion."

• Blame the Treasury Department, insists Anal_yst at the Atlantic. "[N]o one should be attacking Goldman for exercising prudent lending practices. If there is anyone to be outraged at, its the brain trust at the Treasury for extending rescue financing to CIT without exercising similar prudence...Frankly, I'd like to see the Treasury's explanation for this major and easily-avoided failure to protect taxpayer interests, but I'm far too cynical to expect much, if any, accountability from Secretary Geithner or the Obama administration."

• Well-Deserved Profits, says Douglas A. McIntyre at 24/7 Wall St. "The public and Congress have been critical of Goldman's pay packages. They do look excessive during a period when the credit crisis is not yet a year old. But, the government should welcome such problems. Goldman is one of the few financial firms that has not required huge sums of government money and constant attention. Paying its management well is a sign that taxpayer money was never at risk when it went into the Goldman treasury."

• Blame Regulators Who Let Goldman Become a Bank, argues Edward Harrison at Naked Capitalism. "I think eyes should be focused firmly on the government's responsibility and not Goldman when it comes to these issues. Which is why the issues that Simon Johnson raises are important. They go to the core of the regulation of banks."

• Goldman's Getting Too Much Flak, suggests Felix Salmon at Reuters. "It's interesting to me that no one is giving Goldman the benefit of the doubt...That says to me that no one trusts Goldman's flacks to be telling the truth, and that the Goldman image problem remains as bad as it's ever been. Given the choice between making lots of money and having a good public reputation, Goldman will always choose the former. But the bank always used to have a reasonably large number of defenders in the press; that number seems to be shrinking daily."