Kaminsky's Call: Watch Goldman's Core Banking Business

Kate Kelly just rendered Goldman's earnings meaningless.

Goldman Sachs
Goldman Sachs

In her second big scoop this week, (?Jeff Mayer going top Deutsche was the first), Kelly broke the news yesterday that Goldman Sachs had settled with the SEC .

Now that the legal overhang has been resolved, my "Call-to-Action" is to focus on the next key elements for the firm, and it's not the second quarter earnings.

It's the guidance for the second half of the 2010 and the future of its massive, but sometimes overlooked, investment banking franchise.

Assuming that finreg does not result in a breakup of the company, Goldman Sachs can now focus on its future in the emerging world. The growth potential outside of the United States and Western Europe could be Goldman's next great secular growth story over the next five to ten years.

If the core banking franchise holds steady, the only real risk to Goldman's growth will be the cost of that expansion. Talent costs money, and hiring the best bankers could eventually weigh on Goldman's return on equity.

But when it's all said and done, that's a high quality problem.

So what's next? Goldman will go back to doing what's best: servicing its clients. The league tables have shown that at least initially, Goldman's reputational damage has not meaningfully impacted its business.

So before making a decision on GS, let's look past Kelly's breaking news, and past next week's earnings. Let's see what the banking side of Goldman Sachs looks like so we can really determine the true direction of this titan.

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Gary Kaminsky does not hold any equity positions.

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