The mortgage meltdown may have taken a lot of casualties, but Goldman Sachs (NYSE:GS) wasn't among them thanks to a timely bet made by the firm's structured-products trading group. The move made Goldman the only major investment bank to side-step losses during the crisis, as competitors Lehman, Bear Stearns and Merrill Lynch continue to suffer.

The trader group's large bet that securities backed by risky home loans would fall in value generated nearly $4 billion in profits this year, according to the Wall Street Journal. Those gains erased the $1.5 to $2 billion of mortgage-related losses elsewhere in the firm and put the firm on track to record record net annual income of more than $11 billion.

There has been some concern, however, over the firm's trading practices. Goldman's proprietary traders are allowed to "find opportunities" for the firm's capital while making a market for client trading - even if the client's are trading the other end. Interestingly, the firm continued to push its CDO sales through even while its own traders were shorting the issues, planning to profit on their demise. Goldman says the two branches are separate divisions and unrelated.

Unfortunately, the credit markets may cause a whole new set of problems for the firm. Many analysts have been downgrading investment banks, including Goldman, even more amid concerns that tight credit markets will limit M&A activity income and put a damper on the credit securities market. How much this affects Goldman remains to be seen, but given the firm's success during the mortgage meltdown, who's to say?

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Motorola Inc. (NYSE:MOT) is likely to face more pressure from billionaire activist Carl Icahn to breakup the company after the announcement that chief executive Ed Zander would be replaced by Greg Brown. Icahn told the Wall Street Journal today that a breakup of Motorola would likely improve the company's long-suffering finances. Shareholders aren't so sure though, with shares declining over a point on the news.

Icahn's focus is on the spin off of Motorola's handset operations - the company's largest division with $39 billion in sales. The billionaire insists that this division is not contributing to Motorola's stock price and undervalued by the market. Moreover, the company's mobile phone market share has been sliding in recent years, which has dragged down Motorola's stock price along with it. The company tried to remedy the situation by selling off several major operations in recent years while making acquisitions, but it hasn't helped.

"The point is that if the handset business was spun off, with over $20 billion in revenue in a growing industry, it is obviously worth a great deal," said Icahn. However, Motorola has resisted such a move for some time and said it remains committed to its current strategy to improve its business and grow it over the long-term. Icahn is betting that a new CEO, however, may be more open to his ideas to unlock shareholder value.

In the end, Icahn is Motorola's third largest shareholder controlling 3.3% of the company's stock. Unfortunately, this is not large enough to force any change but the activist investor is very well known and has a lot of influence. Whether or not he will succeed in his current coup with management remains to be seen, but this stock is definitely one worth watching in the meantime!

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Washington Mutual (NYSE:WM) shares fell again today after the company announced new measures aimed at curbing subprime and credit losses while preserving liquidity. The measures include widespread job cuts, a dividend cut, and more preferred shares to raise capital. Many are now questioning whether the company will be able to pull itself out of the mess with Banc of America Securities cutting its rating to "sell" with a $13 target.

WaMu announced that it would be cutting 3,000 jobs to cut its costs and issue $2.9 billion in convertible preferred stock to boost its capital. Meanwhile, shareholders will only be receiving 15 cents instead of 56 cents per share in dividends as the company works to set aside an additional $1.6 billion to cover loan losses in the fourth quarter. And with no end to the subprime and credit mess in sight, there is no saying whether or not there will be additional writedowns.

Many analysts have suggested that WaMu could lose as much as $2.54 per share in the fourth quarter of this year and $1.01 per share in 2008. Meanwhile, options in the company continue to trade at record volatility as shares come close to hitting their eleven-year lows. The company is hoping that the lack of liquidity in the credit markets will resolve itself soon as there is limited funding to go around to the various banks looking to raise loss provisions.

So, when will this problem end? Well, subprime and credit market concerns are only growing after many are concerned that coordinated efforts by central banks in North America and Europe to relieve the gridlock in the credit markets will fail. This lack of confidence stemmed from record borrowing costs in euros, signaling that the plan by the Federal Reserve and European central banks to inject funds into the financial system wasn't lowering borrowing costs and boosting lending. This is a problem...

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