Fed Wants More Information From Goldman on Marcus Risk Management

The Federal Reserve is reportedly investigating Goldman Sachs’ consumer business, Marcus.

The Wall Street Journal (WSJ) reported Friday (Jan. 20) that the regulator is looking into the bank’s oversight of the consumer business, its management and governance, and its handling of customers’ problems.

The move began with standard review of the consumer business in 2021 and escalated into an investigation in 2022, according to the report, which cited unnamed sources.

Reached for comment, a spokesperson for Goldman Sachs told PYMNTS via email, “As we told The Wall Street Journal, the Federal Reserve is our primary federal bank regulator and we do not comment on the accuracy or inaccuracy of matters relating to discussions with them.”

A spokesperson for the Federal Reserve Board declined to comment on the report.

As PYMNTS reported Jan. 17, Goldman Sachs’ often reported struggles in consumer lending and cards were quantified on that day when the firm released earnings and supplementals showing that while its installment and card loans had grown, its consumer net charge-offs had soared.

The bank also reported during the earnings call that it has postponed the launch of its checking products.

“At the right time in the future, we intend to offer checking to our wealth management clients,” CEO David Solomon said during the call. “For now, our priority is to strengthen our deposits, card partnerships and GreenSky,” referring to its financing service.

Management also noted that Marcus would cease originations of new personal loans, with the company instead focusing on Platform Solutions’ three business lines: transaction banking, point-of-sale and GreenSky.

Marcus was folded into Goldman Sachs’ asset and wealth management unit in October, while transaction banking and some credit cards went into a new division.

The bank reported days earlier, on Jan. 13, that Platform Solutions — which includes consumer platforms as well as transaction banking and other services for corporate and institutional clients — lost $1.2 billion during the first three quarters of 2022, $1 billion in 2021 and $783 million in 2020.

These losses followed Goldman Sachs’ efforts to build Marcus, a digital-only bank that was to bring the Goldman imprimatur to Main Street retail customers.