UPDATE 6-Goldman profit and pay surge in blowout quarter

* Trading revenue nearly doubles

* $6.65 billion set aside for compensation

* TARP repayment results in $426 million charge

* CFO says "hard to know" if Q2 results sustainable

* Shares finish day's trade up. (Adds comments from lawmakers)

By Steve Eder and Joe Giannone

NEW YORK, July 14 (Reuters) - Goldman Sachs Group Inc (GS.N) said quarterly earnings surged 33 percent on blowout trading results, trouncing forecasts and putting the bank on pace for hefty bonuses that could draw unwanted scrutiny.

The results continued Goldman's extraordinary rebound from a near meltdown of the U.S. banking industry last fall that led to a $125 billion taxpayer bailout for its largest members.

Goldman set aside $6.65 billion for salary, bonuses and benefits in the quarter, up by nearly half from the quarter ended in May last year.

That puts the average Goldman employee on pace to earn more than $900,000 this year. Chief Executive Lloyd Blankfein, senior officers and star traders will likely receive tens of millions of dollars.

The U.S. government wanted "to make sure that the banks are making money, so they do make money," said Francis Campeau, a broker at MF Global Canada in Montreal. "The flip side is now one could argue they're making too much."

Goldman reported net income for common shareholders of $2.7 billion, or $4.93 a share. That compares with $2.05 billion, or $4.58, in the quarter ended May 30, 2008, before the bank switched to a calendar-year schedule.

Analysts on average had forecast earnings of $3.49 a share, according to Reuters Estimates.

Goldman shares ended Tuesday's trade on the New York Stock Exchange up 22 cents to close at $149.66. The shares are up nearly 80 percent this year, compared with a 24 percent rise in the NYSE Arca Securities Broker/Dealer index .XBD.

The first major U.S. bank to report second-quarter results, Goldman said trading income nearly doubled from a year ago to $10.78 billion while its equity underwriting business produced record revenue of $736 million. Goldman's traders thrived in an environment of wide price swings, robust demand and fewer rivals.

"There's less competition out there," Chief Financial Officer David Viniar told reporters in a briefing.