Tuesday, June 23, 2015

Wall Street is Main Street

"Goldman to move into online consumer lending" by Michael Corkery and Nathaniel Popper New York Times  June 16, 2015

NEW YORK — Goldman Sachs has spent 146 years largely as the bank of the powerful and privileged. Now the Wall Street powerhouse is working on a new business: providing loans that can help you consolidate your credit card debt or remodel your kitchen. 


How about that kitchen, huh?

The new consumer lending unit is still in the early planning stages, but Goldman has ambitious plans to offer loans of a few thousand dollars to ordinary Americans and compete with Main Street banks and other lenders, via a website or an app — functioning like a virtual bank.

Without the costs of branches and tellers, Goldman can lend the money at lower interest rates while still making a profit. It hopes to make its first loans next year, people briefed on the plans said.

Goldman is putting itself in league with startups that are similarly trying to use technology to disrupt the traditional business of finance. Banking has been relatively slow to shed its bricks-and-mortar business model — a trend Silicon Valley and now Goldman are seeking to exploit.

That's what Wall Street banks do best.

But the new venture carries considerable risk

I'm sure they can devise bogus products and CDOs that they tell you to buy as they unload the worthless crap like last time.

After the financial crisis, Goldman was vilified, accused of profiting while homeowners lost properties to foreclosure. 

The fraudulent foreclosure crisis, yes, where banks seized homes to balance their bottom lines and show real assets.

If the bank is too hard on its borrowers — suing a struggling family for unpaid debts, for example — it could revive a popular image as a bank that earns profits at the expense of ordinary people.

When was that image discarded? Talk about pathetic pre$$ apologists and publicists!

The lending will also involve Goldman in a relatively risky business in which it has little previous experience, dealing with ordinary borrowers with limited financial cushions.

“Everything Goldman has done in the last 30 to 40 years has all been focused on the commercial side, or things that abut it very closely,” said Chris Kotowski, an analyst with Oppenheimer & Co. “I refuse to believe that hiring a couple of programmers and offering to make $15,000 loans online is a highly value-added banking strategy.”

Still, this new type of lending could help burnish the firm’s relevance to mainstream Americans.

Yeah, we are going to love the den of thieves doing God's work!

The $840 billion consumer loan business is facing a shake-up as online upstarts like Lending Club, Prosper, and even PayPal have begun offering small loans.

These outsiders have captured only a tiny slice of the market. But with their low overhead, they are persuading some analysts they will be able to eat away at the businesses of old-school banks.

What, they aren't ripping people off and showering money of executives?

Jeffery Harte, an analyst at Sandler O’Neill and Partners, said, “Online lending has the potential to be quite disruptive to the way credit is extended.” 

And THAT is a THREAT to the PRIVATE CENTRAL BANKING CARTEL of which Goldman is a part! 


"Blogger and former Federal Reserve chief Ben Bernanke (left) is calling for the Treasury to abandon its plan to drop Alexander Hamilton from the $10 bill and to dump Andrew Jackson from the $20 note instead. Bernanke wrote that he is appalled by Treasury Secretary Jacob Lew’s plan to replace Hamilton with a woman. In a post entitled ‘‘Say it ain’t so, Jack,’’ Bernanke said adding a woman is ‘‘a fine idea, but it shouldn’t come at Hamilton’s expense.’’ He called the first Treasury secretary ‘‘without doubt the best and most foresighted economic policymaker in US history’’ while Jackson, president from 1829 to 1837, was ‘‘a man of many unattractive qualities and a poor president’’ — one who opposed establishing a central bank."

Not a $urpri$e that he would feel that way. Hamilton was the Rothschild's man in America at that time.

Also see: This Blog's Waterloo 

Vacation is over.

To the degree that Goldman can “assess the risk and price things electronically, it may be a low cost way of getting into the business,” Harte said.

The bank’s push into lending is led by Harit Talwar, a former top executive at the credit card giant Discover, who joined Goldman last month.

The company approached several top consumer finance executives about the job, which comes with the title of partner, a coveted position at Goldman, people briefed on the matter said. The operation could have a staff of as many as 100 by year’s end.

In a memo announcing Talwar’s hiring last month, Goldman’s chief executive, Lloyd C. Blankfein, and its president, Gary D. Cohn, noted “the traditional means by which financial services are delivered to consumers and small businesses is being fundamentally reshaped” by technology.

Same with the new$paper bu$ine$$.

Goldman is probably going to focus on prime customers who would not come near the $10 million minimum balance required to be one of its private wealth clients.  

Where do they plan to put the focu$?

The loans would not be backed by collateral, allowing it to charge higher rates. 


But personal loans can be risky. Many people take them as a last resort to deal with cash flow problems. 

Be it a person or a nation (think Greece right now and then and in-between, and what I wasn't told).

"Prime Minister Alexis Tsipras of Greece headed to Brussels late Sunday for a crucial emergency summit aimed at reaching a deal between Athens and its international creditors that would allow the debt-ravaged country to avoid a default and a potentially disastrous exit from the euro. Talks between Greece and its creditors on the completion of an earlier bailout deal had already hit a snag before the January election of the antibailout, antiausterity coalition government headed by the leftist Syriza party. As a result, Greece has not received any bailout funds since summer 2014 and its ailing banking system is kept afloat through a weekly infusion of emergency funds from the European Central Bank. The new government’s approach, essentially denying the need for austerity measures it calls ‘‘recessionary,’’ has stretched the bailout talks to the breaking point. About 5,000 people attended a progovernment rally in Athens Sunday night. On Thursday, a rally was held by those favoring a deal with the European Union. The pro-EU forces will gather again Monday evening."

“If you grow too fast in the personal loan business, you can get some bad surprises,” said William Callender, at AlixPartners.


Maybe you would like a tourre of the place.

NDU: Stocks make slight gains amid optimism on Greek debt deal