Feds looking at Goldman Sachs' Apple Card business unit

Posted:
in General Discussion
The Federal Reserve has opened an investigation into Goldman Sachs to determine if the bank's consumer credit division, which for now includes Apple Card, has enough consumer protections.

Goldman Sachs CEO David Solomon
Goldman Sachs CEO David Solomon


The bank posted losses in its consumer business on January 13, primarily related to the Apple Card. It lost over $1.2 billion in pre-tax losses in the first nine months of 2022, driven mainly by loan-loss provisions.

Goldman also had plans to expand Marcus, its direct-to-consumer business. However, the Fed is now examining if Goldman had used appropriate oversight over Marcus and if it has problems with management or governance, according to a report on Friday from The Wall Street Journal.

Additionally, the Fed will determine what happened in instances of consumer harm, such as whether issues were flagged internally and, if they were, whether the bank adequately resolved them. The probe involves Goldman's compliance functions, auditing, and legal departments.

The bank is folding most of Marcus into its new management unit for assets and wealth. The other parts -- including the Apple Card division -- are moving to the Platform Solutions unit.

"In the consumer platforms, we did some things right. We didn't execute on some others," said Goldman Sachs CEO David Solomon on Wednesday. "We probably took on more than we should have, you know, too much, too quickly."

Goldman Sachs is also currently under an investigation from the Consumer Financial Protection Bureau (CFPB). The CFPB is looking into Goldman's credit card account management practices, refunds, and billing error resolutions.

According to people familiar with the matter, the Federal Reserve and CFPB are sharing information with each other from the investigations.

Where is Apple Savings?

The investigation may be the reason for the delayed launch of Apple's Savings feature it announced in October. Apple Card users were to have the option to transfer their Daily Cash balance into a special interest-accumulating Goldman Sachs savings account.

It was expected to launch with the release of iOS 16.1, but it didn't appear in that version, nor in iOS 16.2. Apple hasn't publicly commented on the delay, but it now seems likely that the problems faced by Goldman Sachs might be the part of -- or the entire -- reason.

Read on AppleInsider

Comments

  • Reply 1 of 15
    MadbumMadbum Posts: 536member
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    edited January 2023 watto_cobrablastdoorbyronl
  • Reply 2 of 15
    carnegiecarnegie Posts: 1,077member
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    Home prices have generally been falling, yes. But the BLS doesn't account for such things as part of its CPI reporting. An owned house is considered a capital good rather than a consumption good or service - an investment rather than a cost of living. Inflation measures are about the latter.

    What the BLS measures for the Shelter category (as regards CPI) is the cost of renting for actual renters (excluding, e.g., utilities), the theoretical cost of renting for homeowners, the cost of lodging away from home (e.g. at college or in hotels) and the cost of renters and homeowners' insurance. The rent equivalent for homeowners is by far the largest component of the Shelter category, but it isn't based on the prices of current home sales. It's based on what they'd be paying in rent if they were renting instead of owning their residences. In other words, it's based on current rent prices.

    The Housing category includes the Shelter category and some other things - e.g., in effect, utilities. But it still doesn't take into account current home prices. Again, CPI measures are about spending on consumption goods and services rather than capital goods investment.

    Rental costs have been flattening and are perhaps just now rolling over (it depends on what reporting you look at), but they haven't been plunging, as you say, like home prices have been.
    iOS_Guy80muthuk_vanalingamwatto_cobraFileMakerFeller
  • Reply 3 of 15
    Is this for sure a special probe? Because all national banks are regularly examined by regulators (OCC, Federal Reserve, FDIC) to obtain a CAMELS rating. It is usually the OCC that mainly examines national banks but they all have the power to do it and they share the results.
    watto_cobradanoxFileMakerFeller
  • Reply 4 of 15
    MadbumMadbum Posts: 536member
    carnegie said:
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    Home prices have generally been falling, yes. But the BLS doesn't account for such things as part of its CPI reporting. An owned house is considered a capital good rather than a consumption good or service - an investment rather than a cost of living. Inflation measures are about the latter.

    What the BLS measures for the Shelter category (as regards CPI) is the cost of renting for actual renters (excluding, e.g., utilities), the theoretical cost of renting for homeowners, the cost of lodging away from home (e.g. at college or in hotels) and the cost of renters and homeowners' insurance. The rent equivalent for homeowners is by far the largest component of the Shelter category, but it isn't based on the prices of current home sales. It's based on what they'd be paying in rent if they were renting instead of owning their residences. In other words, it's based on current rent prices.

    The Housing category includes the Shelter category and some other things - e.g., in effect, utilities. But it still doesn't take into account current home prices. Again, CPI measures are about spending on consumption goods and services rather than capital goods investment.

    Rental costs have been flattening and are perhaps just now rolling over (it depends on what reporting you look at), but they haven't been plunging, as you say, like home prices have been.
    Rent has also been crashing since summer across the country…
    watto_cobrablastdoor
  • Reply 5 of 15
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    The inflation rate is 6.5%.  That is still way too high. You are right about the lagging because they should have started raising rates right away instead waiting. Remember all of that bullshit about inflation being transitory?
    watto_cobra
  • Reply 6 of 15
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    What did the English language do that made you so abusive toward it?
    FileMakerFeller
  • Reply 7 of 15
    Goldman Sachs is a company whose CEO testified to Congress that their biggest money maker during the Great Recession was intentionally marketing bad securities packages as good securities packages to their customers with the justification being "customers who do business with Goldman Sachs should be savvy enough to know when we're lying". Always keep that in mind whenever you hear Goldman management talking about pretty much anything...
    edited January 2023 racerhomie3watto_cobraFileMakerFeller
  • Reply 8 of 15
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    That’s just how the basket is calculated. You can call it out , but there isn’t a new way of counting the basket of spending 
    watto_cobra
  • Reply 9 of 15
    StrangeDaysStrangeDays Posts: 12,834member
    Madbum said:
    carnegie said:
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    Home prices have generally been falling, yes. But the BLS doesn't account for such things as part of its CPI reporting. An owned house is considered a capital good rather than a consumption good or service - an investment rather than a cost of living. Inflation measures are about the latter.

    What the BLS measures for the Shelter category (as regards CPI) is the cost of renting for actual renters (excluding, e.g., utilities), the theoretical cost of renting for homeowners, the cost of lodging away from home (e.g. at college or in hotels) and the cost of renters and homeowners' insurance. The rent equivalent for homeowners is by far the largest component of the Shelter category, but it isn't based on the prices of current home sales. It's based on what they'd be paying in rent if they were renting instead of owning their residences. In other words, it's based on current rent prices.

    The Housing category includes the Shelter category and some other things - e.g., in effect, utilities. But it still doesn't take into account current home prices. Again, CPI measures are about spending on consumption goods and services rather than capital goods investment.

    Rental costs have been flattening and are perhaps just now rolling over (it depends on what reporting you look at), but they haven't been plunging, as you say, like home prices have been.
    Rent has also been crashing since summer across the country…
    Nonsense. Rents are nuts, and I’m a landlord.
    FileMakerFeller
  • Reply 10 of 15
    Madbum said:
    carnegie said:
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    Home prices have generally been falling, yes. But the BLS doesn't account for such things as part of its CPI reporting. An owned house is considered a capital good rather than a consumption good or service - an investment rather than a cost of living. Inflation measures are about the latter.

    What the BLS measures for the Shelter category (as regards CPI) is the cost of renting for actual renters (excluding, e.g., utilities), the theoretical cost of renting for homeowners, the cost of lodging away from home (e.g. at college or in hotels) and the cost of renters and homeowners' insurance. The rent equivalent for homeowners is by far the largest component of the Shelter category, but it isn't based on the prices of current home sales. It's based on what they'd be paying in rent if they were renting instead of owning their residences. In other words, it's based on current rent prices.

    The Housing category includes the Shelter category and some other things - e.g., in effect, utilities. But it still doesn't take into account current home prices. Again, CPI measures are about spending on consumption goods and services rather than capital goods investment.

    Rental costs have been flattening and are perhaps just now rolling over (it depends on what reporting you look at), but they haven't been plunging, as you say, like home prices have been.
    Rent has also been crashing since summer across the country…
    Nonsense. Rents are nuts, and I’m a landlord.
    I know it isn’t exactly the same but we own a rental property in a popular summer vacation spot. We increased the weekly rent by almost 20% for summer 2023 as advised by our agent, who tells us all their rental properties have increased a similar amount. Not sure where the idea that rents have been crashing came from.
    muthuk_vanalingamFileMakerFeller
  • Reply 11 of 15
    blastdoorblastdoor Posts: 3,258member
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    Agreed — they were behind the curve on the way up and they’re behind on the way down. They should definitely stop raising rates and maybe even cut a bit.
  • Reply 12 of 15
    blastdoorblastdoor Posts: 3,258member
    I like Apple Card 
  • Reply 13 of 15
    danoxdanox Posts: 2,804member
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    What did the English language do that made you so abusive toward it?
    This site is an informal, get together (conversation) by people with like interest who cares about grammar?
    edited January 2023
  • Reply 14 of 15
    danox said:
    Madbum said:
    There is nobody causing more harm to regular working people than the a federal Reserve with their crazy interest hikes based on lagged data. Well maybe with exception of Putin… But actually FED might be affecting more people than Putin…

    an example, CPI report Fed based their policy on said there was a .8 increase in housing and shelter in December. Show be one place in this country housing increased by .8 percent in December…. The answer is none as all housing has been plunging since summer…

    but the Fed is still using that lagged data…

    so the Fed need to look in mirror before telling a Goldman what to do to protect consumers
    What did the English language do that made you so abusive toward it?
    This site is an informal, get together (conversation) by people with like interest who cares about grammar?
    Grampa?
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