Goldman Sachs reported its second quarterly loss since going public in 1999 as the turmoil in Europe and Washington took its toll on its business.
Goldman's third-quarter loss of $393m (£249m), or 84 cents a share, compared with a profit of $1.9bn, or $2.98 a share, a year earlier. Revenues were $3.59bn, down 60%. Analysts' average forecasts had been predicting revenues of $4.78bn for the quarter.
"CEO and investor confidence as well as asset prices across markets were lower in the third quarter given the uncertain macroeconomic and market conditions. Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter," said Goldman chairman and chief executive officer Lloyd Blankfein.
"However, we believe the strength of both our client franchise and our balance sheet positions us well for when economies and markets improve."
Rival Bank of America posted a pre-tax profit of $6.2bn, up from a loss of $7.3bn a year ago. But much of the profit was derived from the sale of $3.6bn of shares in China Construction Bank, plus a $4.5bn gain from accounting adjustments due to BoA's own debt having become riskier.
"The [$4.5bn] fair value adjustment on structured liabilities reflects the widening of the company's credit spreads and does not impact regulatory capital ratios," the bank said.
Tough trading at Goldman
Goldman's trading division suffered, with fixed-income, currency and commodity revenue fell 36%.
Goldman continued to be the top rated bank for mergers and acquisitions but even so its investment banking business fell by a third. Net revenues in investment banking were $781m, 33% lower than the third quarter of 2010 and 46% lower than the second quarter of 2011.
Net revenues in its financial advisory business were $523m, up slightly from the third quarter of 2010, while revenues in the firm's underwriting business were $258m, 61% lower than the third quarter of last year. Net revenues in both equity underwriting and debt underwriting were also significantly lower than the same period last year.
Goldman's results came as Bank of America announced a third-quarter profit of $6.23bn, compared with a loss of $7.6bn for the same period last year.
Bank of America shares have more than halved this year as it has struggled to clear itself of the legacy of involvement in the subprime credit market. Last year's figures were dragged down by a $10.4bn write-off mainly related to its subprime loans.