Investment houses’ gain could amaze

NEW YORK – Driven by the unprecedented value of takeovers and a roaring stock market, Wall Street’s biggest investment houses are set this week to report quarterly results that have the potential to leave investors breathless.

The biggest players in investment banking – with Goldman Sachs Group Inc. leading off Tuesday – have reaped blockbuster fees in a record year for global merger and acquisition activity. The volume of acquisitions announced in 2006 broke the record set in 2000, with more than $3.46 trillion in deals reached this year.

Wall Street analysts spent the past week raising their earnings projections, telling clients they underestimated the breadth of deals the securities firms would capture. The fourth quarter has seen $908.2 billion of announced deals, beating out last year’s $846 billion, according to financial data provider Dealogic.

In this past week alone, Bank of New York Corp. said it would buy rival Mellon Financial Group Inc. for $16.5 billion, and LSI Logic Corp. snapped up rival Agere Systems Inc. for $4 billion.

Goldman Sachs, Morgan Stanley Inc., Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. have earned a combined $21.3 billion in the first nine months of the year. This surpasses the full-year record of $20.4 billion set in 2005.