Goldman, where are the shareholders' and taxpayers' yacht

--James Saft is a Reuters columnist. The opinions expressed are his own--

By James Saft

HUNTSVILLE, Alabama (Reuters) - As much as bonus-eligible employers may rejoice, the government, taxpayers and shareholders have real reasons to be concerned about Goldman Sachs' huge surge in profits and how they are being generated and allocated.

Goldman this week notched up its largest ever profit as a public company - $3.44 billion for the second quarter - but did it while taking on considerably more risk by a key measure.

Furthermore, Goldman set aside 48 percent of its total revenue, or $6.65 billion, to fund employee compensation, an amount that is not only titanic for a company that only recently was in receipt of direct government support but is, even more astonishingly, the same percentage as was doled out to employees in 2007, in the supposedly bad old pre-crisis days.

"Our model never really changed," Goldman Sachs Chief Financial Officer David Viniar told Bloomberg News. "We've said very consistently that our business model remained the same." I'll say.

We have just lived through the biggest financial markets blowup in several generations, one in which a catastrophic mixture of bad policy, lax regulation, failed risk management and perverse incentives combined to throw the world into recession and put taxpayers in the position of having to bail out the financial sector.

But yet, Goldman is taking on more risk than before the deluge, and, when it makes more money, allocating the same amount to the no-doubt brilliant employees who helped produce it.

If I were a politician who might need to underwrite the next bailout if Goldman's bets go bad, I'd be a bit worried.

If I were a Goldman shareholder who had seen Lehman and Bear Stearns fall, I'd be wondering why, given the risks they exemplify, I don't get a bigger share of the pie.

It all puts me very much in mind of the old and doubtless apocryphal joke about the out of town J.P. Morgan client a century ago who, when his salesman sought to impress him by pointing out the yachts of Mr. Morgan and his executive lying at anchor at the foot of Wall Street quipped, "Where are the customer's yachts?"

Where, indeed, are the shareholders' yachts, and, if the taxpayers can't get yachts, where are their harbor fees to help clean up the oil slicks when the yachts sink?

A CREATURE OF GOVERNMENT

Goldman's value-at-risk (VAR), a calculation which attempts to measure potential daily losses, increased to $245 million in the quarter, up from $185 million last May and just $127 million in the palmy days of February, 2007.

Shareholder equity has also increased, so you could argue that there is a bigger cushion to buffer losses, but even so Goldman is taking on nearly 15 percent more VAR as compared to shareholder equity than in February 2007.

To be fair, leverage, the ratio of assets to shareholders equity, at the bank is falling and stands at 14.2 percent.