Positive, Negative Takes on New Revelation.

Goldman Sachs revealed this week that it had taken $5 billion in investment losses during the credit crisis, an "info-bite" that can be viewed in opposing ways, depending on one's predisposition to Goldman and/or Wall Street.  On the one hand, Goldman sought to answer criticism that it puts its interests ahead of its clients’, and to lift some of the secrecy surrounding its business.  On the other hand, the revelations will deepen the debate over companies’ financial disclosures.

    What Changed.   The figures, issued as part of internal reforms aimed at silencing Goldman’s critics, show that the bank suffered $13.5 billion in losses from “investing and lending” with its own funds in 2008.  But Goldman’s regulatory filings and its executives’ comments to investors at the time pointed to about $8.5 billion of losses arising from its investments in debt and equity, as markets were rocked by the turmoil.

    Commentary.  Lynn Turner, former chief accountant for the SEC, praised Goldman’s move but called for the SEC to look into the bank’s past disclosures.  While it sets a good example for others to follow, Mr. Turner said, "But it does raise the question as to why the management did not provide this view back then and whether the SEC are going to do something about this discrepancy."  He further noted, "For such a discrepancy to have arisen, management must have lost an eye." No comment from the SEC or Goldman.

While this topic will be flushed out in greater depth in the coming days and weeks, this much we know:  Goldman’s disclosures will put pressure on rivals to follow suit at a time when the "Volcker rule" seeks to curb banks’ “proprietary activities” on their account.   

For further details, go to:   [CNBC.com, 1/14]