There's an old joke that a new MD at Goldman is looking to hire 5 new analysts for his department.

The new MD goes to his old boss and asks, "What should I do? I have 10 resumes from 10 great candidates, who all went to Ivy League school, graduated with perfect GPAs and all interviewed very well. How do I decide who to hire?"

The old boss asks to see the pile of resumes, and gives them a quick glance. He then shuffles the pile of resumes, throws the top five in the garbage, and hands the new MD the remaining five and says, "Hire these five."

The new MD is shocked - he exclaims, "Is this how Goldman Sachs does is hiring?! It's so capricious!"

The old boss responds, "It isn't capricious. Goldman Sachs doesn't hire unlucky people - and all the resumes I threw out belong to unlucky people."

I heard the same joke about McKinsey. Makes sense, after all McKinsey is the Goldman Sachs of consulting.

Goldman's secret to "success" in this instance is the freshly changed accounting rules (see my comment elsewhere) and in the recent past has been the patronage of ex-Goldman Sachs CEO and now treasury secretary Paulson.

Actually, Paulson is no longer the Treasury Secretary. Timothy Geitner holds that post.

Accounting rule changes that were long overdue. I know of at least one case of a mortgage firm whose loans were performing but was put under by the decline in market value of its assets.

Presumably if Goldman Sachs' success is solely due to changes in accounting rules, we will see most other financial firms follow in their footsteps.

This is most likely not fantastic news. This is most likely terribly misleading news. As noted, suspending aspects of mark-to-market undoubtedly helped their bottom line. And who knows how much of these "profits" were the result of one-time payments from the government via AIG. There is so much opacity with all banks' financial statements that trusting them seems unwise. Wells Fargo claimed they had record profits in Q1, and just today an analyst estimated that Wells actually needs at least another $50 billion. Who do you trust - people effectively talking up their own books, or independent observers who still see huge problems ahead?