Back in 2008, the public went wild over the government’s use of taxpayer money to bail out insolvent banks who had speculated and lost during the Housing Bubble bull market. But even this was not as critical as the rage the American people felt when these same banks gave their executives massive bonuses based on capital received from that bail out.
And now seven years later, one of the major culprits who should have gone the way of the dodo bird is setting up to one day fleece the American people once again, only this time it will be under the auspices of the now infamous Dodd-Frank legislation that allows for depositor bail-ins during a monetary or banking crisis.
That culprit is none other than Goldman Sachs, who on Aug. 13 just added commercial banking to their repertoire by acquiring GE Capital Bank (“GECB”), and their $8 billion of online deposits.
Goldman Sachs Bank USA (“GS Bank”) announced today it has entered into an agreement with GE Capital Bank (“GECB”) to acquire GECB’s online deposit platform and assume GECB’s approximately $8 billion in online deposit accounts and $8 billion in brokered certificates of deposit for an expected total of approximately $16 billion of deposits at closing. GS Bank will acquire no financial assets in the transaction other than cash associated with the deposit liabilities.
“This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel. The establishment of this channel represents the advancement of a key funding objective for the firm,” said Liz Beshel Robinson, Treasurer of The Goldman Sachs Group, Inc. – Goldman Sachs
So now that Goldman has both a commercial (savings and checking), and investment arm at its disposal, any financial crisis that effects the solvency of the bank will allow them to confiscate those deposits legally to re-capitalize either side of the bank’s business.
Which of course would include using that money if necessary to pay for executive bonuses, since they have already proven to have used capital from the taxpayer to fund this largesse in the past.
Anyone who trusts the banking system to take care of your money, and protect your interests will become the punch line of the old axiom, a fool and his money are soon parted. And since Goldman Sachs has a history of betting against their own clients on the investment side of their business, how trustworthy should any depositor feel now that they have control over bank accounts used as lifelines for everyday people?
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.