Goldman Sachs is already “too big to fail.” But now the megabank is quietly trying to get even bigger, with little transparency or oversight.1
A few months ago, Goldman Sachs announced its intention to buy an online banking unit worth $16 billion from GE Capital. The purchase would move the former investment bank deeper into the realm of federally-insured commercial banking, without providing any clear benefit to consumers or communities in need.2
This is exactly the type of behavior that we could avoid if the Glass-Steagall Act were reinstated — separating risky investment banking from commercial banking, and protecting Americans’ savings accounts from Wall Street’s gambling.
Instead of putting the purchase under the microscope, the Federal Reserve – stacked with former Goldman Sachs executives – has allowed the bank to get away with little transparency.3,4 We need to speak up now to demand public hearings to ensure that “Government Sachs” is not using its deep connections to push through a deal without anyone asking hard questions.
Bill Dudley, the president of the Federal Reserve Bank of New York, used to work at Goldman Sachs. In fact, three of the twelve presidents in the Federal Reserve system are former Goldman Sachs executives. Last year, a whistleblower released audio recordings of Federal Reserve officials showing extreme deference to Goldman Sachs bankers.
Just a few days ago, Goldman paid $50 million to settle charges that an employee it hired from the Federal Reserve illegally accessed confidential Fed documents to aid a client.5 To top it all off, a prominent former Fed regulator is now the chief compliance officer for GE Capital, which would also benefit from the sale.6
These close ties may be helping Goldman push through a deal without badly needed scrutiny. Some reports even indicate that Federal Reserve officials like General Counsel Scott Alvarez may have taken additional, weekend phone calls with Goldman Sachs representatives, before the public received notice of the bank’s plans, to help smooth the approval of the sale.7
For decades, federal law has demanded regulators take public benefits into account when approving banking deals like this one. But according to our friends at the National Community Reinvestment Coalition (NCRC), Goldman Sachs provided only flimsy arguments about how the move will benefit communities in need. NCRC recently wrote a letter to the Federal Reserve demanding public hearings and the extension of the public comment period to give the public a chance to weigh in – and we need to add our voices immediately.8
The Goldman / GE Capital deal will not create a public benefit. In fact, it may make matters worse. After all, Goldman Sachs has broken the law countless times, and been forced to settle countless cases alleging criminal wrongdoing.
If this deal goes through, the former investment bank would have more deposits insured by the federal government, while continuing its risky bets in other areas. Leaders are increasingly calling for a reinstatement of Glass-Steagall rules to ban this type of arrangement.9
- Tell the Federal Reserve: Hold public hearings on the Goldman Sachs banking deal. Petition to Federal Reserve Chair Janet Yellen and Federal Reserve Bank of New York President Bill Dudley:
- “Hold a public hearing and extend the comment period on Goldman Sachs’ proposed acquisition of GE Capital bank deposits, which would provide no public benefit while allowing a bank that has repeatedly broken the law to grow even larger.”
Go to the below site to sign the petition:
Thank you for speaking out,
Murshed Zaheed, Deputy Political Director
CREDO Action from Working Assets
Kaja Whitehouse, “Group opposes Goldman purchase of GE deposits,” USA Today, September 21, 2015.
Ben Walsh, “After Criminal Leak Case, Goldman Changes Its Revolving Door Policy,” Huffington Post, October 28, 2015.
“Leadership: Michael Silva,” GE Capital.
Matthew R. Lee, “FOIA Response to ICP Shows Fed Solicitude to Goldman, Appeal Filed,” Inner City Press, October 25, 2015.
“NCRC Comment Letter on Goldman Sachs’ Proposed Acquisition of GE Capital,” NCRC.org, September 19, 2015.
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