Goldman Sachs Applies for New York Bank Charter

Goldman Sachs is applying for a New York bank charter. The application is one of the steps the New York-based investment bank is making in its move to become a commercial bank.

Goldman’s competitors, Bank of America, Citigroup, Morgan Stanley, and JP Morgan Chase are banks that have a national charter, which allows banks to open branches in different states without needing to apply for separate charters in each state. Having a New York charter, however, will not prevent Goldman Sachs from opening branches outside the state.

Goldman’s move to obtain a state charter is a sign that the company may not want a consumer-oriented business that operates on a national level. Rather than focusing on retail banking services, the firm will likely concentrate on managing rich people’s assets.

New York Superintendent of Banks Richard H. Neiman says Goldman’s application affirms that both the state and national banking systems are “alive and well.” Meantime, New York Governor David Peterson said Goldman’s decision reflected the state’s ability to “effectively regulate” banks.

In regards to Goldman’s state bank charter application, Stockbroker Fraud Attorney William Shepherd, who is the founder of securities fraud law firm Shepherd Smith Edwards & Kantas LTD LLP had this to say:

“Isn’t it interesting that Goldman Sachs decided to become a bank after the bailout plan was passed, but-apparently-does not intend to become a “real” bank. Isn’t it also interesting that the bailout plan was just changed to provide capital to “banks.”

It is curious that the handful of banks selected to receive taxpayer funds includes Goldman Sachs. Finally, is it any coincidence that the mastermind of the bailout plan is “Hank” Paulson, former chief of Goldman Sachs? Oh, I failed to mention that the person chosen by Paulson to oversee the bailout plan is a former vice president of … none other than Goldman Sachs.”

Goldman Sachs Seeks New York Bank Charter, New York Times, October 13, 2008
Goldman applies for N.Y. charter, Money.CNN.com, October 14, 2008

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