Goldman, Buffett Deal Could Help Financials, ETFs

September 24, 2008 at 10:00 am by Tom Lydon      Bookmark and Share

Financial ETFCould the financial companies and exchange traded funds (ETFs) get a boost of confidence after a deal between two big Wall Street names? Here’s hoping.

Gouldman Sachs (GS) said that it has received $5 billion in a common stock offering as part of a plan that also includes an investment of at least $5 billion by investor Warren Buffett, reports Stephen Bernard for the Associated Press.

This is just days after Goldman got the go-ahead to convert into a bank holding company instead of an investment bank. By doing so, both Goldman and Morgan Stanley (MS) avoided the fate of Bear Stearns and Lehman Brothers.

The FBI has gotten involved with an investigation into the companies at the heart of the meltdown of the U.S. economy, says Lara Jakes Jordan for the Associated Press. The bureau is looking at potential fraud by mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE), along with American International Group (AIG) and possibly Lehman Brothers.

With these four firms added to the mix, the total number of inquiries taking place right now totals 26.

Lawmakers in Washington are still considering the bailout package.

Financial ETFs are trading mixed this morning:

  • Financial Select Sector SPDR (XLF): down 27.9% year-to-date; AIG is 4.1%; Morgan Stanley is 2.6%
  • iShares Dow Jones U.S. Broker-Dealers (IAI): down 42.2% year-to-date; Goldman is 10.9%; Morgan Stanley is 8.7%
  • Vanguard Financials (VFH): down 22.8% year-to-date; AIG is 3.1%; Goldman is 3.1%

XLF, VFH, IAI

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