Stop Goldman Sachs from Acquiring GE Capital Bank Deposits

In August of this year, news broke that Goldman Sachs plans to acquire certain assets and liabilities of GE Capital Bank, as General Electric downsizes its financial services division. Under the proposed transaction, Goldman would obtain around $16 billion of deposits.

Goldman Sachs must not be allowed to grow through this transaction.

Put simply, there is no evidence that the acquisition would create a benefit for the public, as required by the law, and Goldman Sachs has put forth no meaningful plan to show how they would better serve communities. In fact, the publicly available version of Goldman's application for the transaction was so filled with redactions it would be comical if it weren't so troubling.

They are also serial offenders who truly deserve to be turned away by the Federal Reserve in their efforts to acquire these deposits.

From 2010 and 2014 Goldman Sachs paid over $4.1 billion in penalties, fines and settlements. During that same period they did only $18.7 million in small business lending, a drop in the bucket compared to what they've had to pony up because of their bad behavior. And they lag behind their peers when it comes to reinvestment in communities.

The amount of wrongdoing Goldman Sachs has been involved with is staggering. Manipulation of stock market prices. Predatory lending. Deceptive marketing practices. Illegal campaign activity. Betting against their own customers. The list goes on and on. Journalist Matt Taibbi famously called Goldman Sachs "a great vampire squid wrapped around the face of humanity..." It's a well-earned moniker.

What you see with Goldman Sachs is a pattern of behavior that is consistently abusive, irresponsible and reckless, with little regard for the law. In other words, they are among the last institutions that should be allowed to grow and spread their practices further.

Goldman Sachs' acquisition of the GE Capital Bank deposits is dependent on Federal Reserve approval - it's up to the Fed. The Federal Reserve must not reward the poster child for bad bank behavior. They must not feed the vampire squid. And they must make sure that the proceedings in consideration of the transaction take place in daylight, in public, not in a proverbial smoky backroom.

It's already well documented that there is a cozy relationship between Goldman Sachs and the Federal Reserve, with a considerable revolving door between the bank and the regulator. And there is some evidence that those close relationships have gotten the bank some preferential treatment with regard to this deal.

Documents obtained through the Freedom of Information Act (FOIA) reveal that the law firm representing Goldman Sachs reached out to the Federal Reserve's top lawyer multiple times before the bank even filed an application regarding the acquisition. In a series of interactions (including weekend phone calls), it appears the bank may have been coached by the Fed regarding the structure and timing of the transaction. In other words, it sure looks like the fix was in.

The public must have confidence that the process for banks acquiring other banks is one that is fair and transparent. The only way for the Federal Reserve to ensure that this occurs is to hold public hearings on this matter. Hearings will allow for Goldman Sachs to come clean about their plans for the GE Capital Bank deposits they are acquiring, and give the public adequate opportunities to voice their concerns.

As more people learn about Goldman Sachs' plan, opposition to the acquisition is growing by the day. State and local community groups from across the nation as well as national consumer groups have flooded the Federal Reserve with calls and letters. A CREDO petition calling for public hearings on the acquisition has over 61,000 signatures.

In response to community feedback, the Federal Reserve extended the public comment period for the acquisition for a meager 30 days, but to truly make the process fair and transparent, public hearings are a must. The Federal Reserve's response to Goldman Sachs' application for this acquisition will be the bellwether on whether the Fed really learned from the financial crisis. Too big to fail. Too big to jail. Too big for the Federal Reserve to say no?