ANALYSIS - Goldman Sachs profit bonanza could stoke anger

By Steve Eder

NEW YORK (Reuters) - Under normal circumstances, Goldman Sachs Group Inc might be afforded a moment of gloating as it struts toward what could be a banner earnings announcement just nine months after being roiled by Wall Street's worst crisis since the Great Depression.

But these aren't ordinary times for the biggest U.S. investment bank, which lately has faced a torrent of unwanted publicity stemming from employee theft allegations and an unflattering spread in Rolling Stone magazine.

Now Goldman, expected to announce second-quarter earnings on Tuesday, finds itself in a no-win situation.

If earnings are too good critics may lambaste it for ramping up risk too much and embracing a hedge fund-like model that could make it vulnerable to big market swings.

If they fall short, investors may accuse the firm of failing to live up to its reputation for being more aggressive and intelligent than its rivals.

"They are between a rock and a hard place," said Walter Todd, a portfolio manager with Greenwood Capital Associates, which owns shares of rival Morgan Stanley.

And, regardless of the results, critics may fall back on the old "Government Sachs" refrain, a nod to the number of former Goldman defectors now working in government, and claiming special treatment.

From a public relations standpoint, Todd said that leaves Goldman asking questions familiar to the oil industry as it contended with windfall profit taxes amid spiking gas prices.