Courtesy of Pam Martens.
Goldman Sach’s Advertising Slogan Is “Progress Is Everyone’s Business.”
Back in 2010, with the public still numb from the epic financial crash and still in the dark about the trillions of dollars of secret loans the Federal Reserve had pumped into the Wall Street mega banks to resuscitate their sinking carcasses, Matt Taibbi penned his classic profile of Goldman Sachs at Rolling Stone, with this, now legendary, summation: “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Historically, what smells like money to Goldman Sachs has been eight-figure money and higher. As recently as 2013, the New York Times reported that Goldman had a $10 million minimum to manage private wealth and was kicking out its own employees’ brokerage accounts if they were less than $1 million. Now, all of a sudden, Goldman Sachs Bank USA is offering FDIC insured savings accounts with no minimums and certificates of deposits for as little as $500 with above-average yields, meaning it’s going after this money aggressively from the little guy. What could possibly go wrong?
The last utterances we ever hoped to see bundled into a bank promotion were the words “Goldman Sachs” and “FDIC insurance” and “peace-of-mind savings.” But that’s what now greets one at the new online presence of Goldman Sachs Bank USA, thanks to the repeal of the Glass-Steagall Act in 1999, which allowed high-risk investment banks like Goldman Sachs to also own FDIC-insured, deposit-taking banks.
Goldman Sachs has been paying lots of fines for wrongdoing in the past few years, topping off at a cool $5 billion earlier this month for what the U.S. Justice Department characterized as “serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail.” There was also the $550 million settlement in 2010 with the SEC for Goldman allowing the hedge fund run by billionaire John Paulson to secretly assist it in creating a portfolio designed to fail so Paulson could short it, while Goldman sold it to its own clients without divulging this pesky detail.
Students of Wall Street history may also recall that Goldman’s hubris leading up to the crash of 1929 played a role in why the Glass-Steagall Act of 1933 banned casino-like investment banks from getting near insured deposits. Prior to the ’29 crash, Goldman ran the Goldman Sachs Trading Company, a closed end fund (called a trust in those days). Goldman Sachs also offered that deal to the little guy at $104 a share. The fund appeared to investigators as a dumping ground for Goldman while also paying it a hefty management fee. The little guy who bought the shares at $104 a share at the top of the bull market was left with about a buck and change after the ’29 crash.
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