Back in April, when Goldman Sachs released its blockbuster earnings for the first quarter of 2010, the shadow of the SEC’s lawsuit against the institution, alleging it had defrauded a client, overshadowed all the good news. Now, three months later, the pattern has been reversed. Days after reaching a settlement with the SEC on the fraud suit—on terms that were far more advantageous than many Wall Street insiders had dared imagine—the firm reported worse-than-expected earnings for its second quarter of 2010.

Analysts had been steadily marking down their estimates for Goldman’s second-quarter results since the beginning of June, when it became clear just how bad the impact of events and trends ranging from the stock-market “flash crash” and the European debt crisis to the growing risk aversion among investors would be for the firm’s trading operations, the power behind its earnings. It’s always risky to try to read too much into the events of a single three-month period—or the news that emerges during a single week—but here are some thoughts to ponder as Goldman and its rivals focus their sights on trying to pull together stronger numbers for their investors in the second half of 2010.

It’s all about ROE. Main Street gets very excited about the percentage of Goldman’s revenues that is set aside for year-end bonus payments to its top bankers, but for investors in big financial institutions, that’s a sideshow. What matters is the kind of return on equity that those well-paid bankers generate. Even setting aside the impact of the U.K. payroll tax and of the $550 million SEC settlement (a onetime event), Goldman’s ROE dipped to what, for it, is a worryingly low level—9.5 percent on an annualized basis.

Investment-banking veterans point out that to attract and retain capital, their firms need to generate at least a 10 percent return on equity. A firm like Goldman Sachs, which has traditionally rewarded its investors with 20-percent-plus returns, faces higher expectations, not only because of its track record, but also because of the nature of its business. The institutional focus and the reliance on market-making, proprietary trading, and other businesses that rely on using the firm’s capital relatively aggressively mean investors want a higher rate of return in exchange for what they perceive as a risk.

Former Goldman insiders note that the firm’s leaders have always seen falling below the 20 percent threshold as something to avoid. An ROE below 10 percent can’t be tolerated, especially when even the recovering Morgan Stanley—Goldman’s traditional investment-banking archrival—can pull out a 12.2 percent ROE in the same period.

Where will the profits come from? This is a question that bedevils every large financial institution, and not only Goldman Sachs. It is becoming more acute with the passage of the Dodd-Frank Act. A year ago, Wall Street was certainly anxious about what was coming next, but was able to take comfort from the market’s bounce off the bottom and the surge in trading and underwriting activity (particularly in the debt markets) that followed that. Today, any residual panic may have abated, but the peril of institutional collapse has been replaced with less dramatic but longer-term challenges: In the new regime, how will Wall Street firms be able to generate the profits to which their shareholders have become accustomed?

While the reform bill wasn’t signed into law by President Barack Obama until this week—early in the third quarter—the events of the second quarter reminded bankers and traders that their world is likely to become more difficult to navigate. True, the events to which they tried to respond were market forces: the tailwinds of early 2009, as investors tried to reposition themselves and companies raised capital to bolster their balance sheets were replaced by headwinds in the spring and early summer of 2010. Even Goldman’s key role in underwriting one of the biggest IPOs of the year, that of Tesla Motors, didn’t help move the dial.

In normal times, Wall Streeters might be able to draw some comfort and reassure their investors by reminding them that what star banking analyst Meredith Whitney recently referred to as “heinous” market cycles are just that—cyclical. This time around, that’s going to be more difficult. For one thing, the problems that contributed to the toxic market conditions may last longer. There will be no quick-and-easy resolution to Europe’s ongoing debt crisis. Meanwhile the economic signs within the United States remain worrying. Markets are volatile, and even traditional risk takers, like traders, are pulling in their horns.