Seen as one of the strongest investment banks -- independent or otherwise -- to emerge through the ongoing credit crisis, third quarter results at Goldman Sachs (GS) show that even those that managed to steer clear of questionable mortgages and even more questionable securities tied to them are running into stiff market headwinds. Third quarter profit dropped 70 percent from one year ago, to $845 million, or $1.81 per share; one year ago, the firm earned $2.85 billion, or $6.13 per share. But it was the language used by executives that was perhaps most telling; one quarter ago, the company referred to fixed income trading as "strong," while today's press statement found CEO Lloyd Blankfein citing a "marked decrease client activity." Net losses on mortgages totaled approximately $500 millon on residential mortgage loans, Goldman said, and $325 million on commercial mortgage loans and securities. The mortgage led hit drove a 67 percent drop in revenue in the company's fixed income trading unit, while equity trading saw revenues fall 50 percent. Goldman and Morgan Stanley (MS) now stand alone as the two remaining independent investment banks, after Bear Stearns collapsed earlier this year, Lehman Brothers Holdings Inc. (LEH) filed for bankruptcy, and Merrill Lynch & Co. (MER) ran into the arms of Bank of America Corp. (BAC) earlier this week. With headwinds slowing Goldman's roll, more than a few market observers are wondering what sort of future lay ahead for independing i-banks in a rapidly-reshaping financial landscape. That said, Goldman did beat most analysts' estimates, coming in a full 10 cents per share ahead of mean estimates per Thomson Rueters. And the firm reported a profit, something many others in this market have been unable to do. CFO David Viniar took a defiant tone on an analysts call Tuesday morning, saying the investment bank has no plans to merge with a commercial bank, as well as no interest in bailing out any of its ailing competitors. "This was a challenging quarter as we saw a marked decrease in client activity and declining asset valuations," said Blankfein, in the earnings statement. Shares in Goldman slid sharply to start Tuesday's trading session, falling as far as 11 percent, but had pared most of the early losses by early afternoon. Shares were at $133.64, off just 1.37 percent, when this story was published. Disclosure: The author held no relevant positions when this story was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.