How the mighty have fallen; Goldman Sachs is hurting over the subprime crash. Its fixed income division took a beating over stupid investments in the US housing market. The bank should have stuck to doing business with its wealthier clients, who in constrast to subprime borrowers, tend to pay back their loans.

(UK Telegraph) Goldman Sachs and Bear Stearns highlighted the problems in the US sub-prime mortgage market as both brokerages suffered large declines in their fixed-income trading businesses.

Goldman Sachs reported a 24pc drop in its fixed income division, limiting overall second-quarter profits to a 1pc rise to $2.33bn (£1.18bn). Although the figure beat Wall Street expectations, Goldman Sachs has become used to blowing forecasts out of the water and failed to beat the record numbers of the first quarter.

The dip reflected "continued weakness in the sub-prime sector", the company said, as well as tough comparisons from last year when it sold some of its electricity assets.