From the 1% to $1

TO THE extent that Goldman Sachs has anything to do with the little guy, it is usually accused of trampling over him in pursuit of profit. As an investment bank, Goldman had not sought out deposits and the onerous regulation that comes with them. In recent years it has declined even to manage assets for clients with less than $10m, in the hope of escaping rules regarding “unsophisticated investors”. Yet all that changed in mid-April, when it completed its purchase of GE’s internet-banking subsidiary. That brought it $16 billion in retail deposits. It is now soliciting more, offering generous interest (by today’s miserly standards) on balances of as little as $1.

Admittedly, Goldman already held $88 billion in deposits. But those were either the cash holdings of the millionaire customers of its wealth-management arm, or accounts steered to it in wholesale batches via middlemen. Online deposits at GS Bank, as the internet bank is known, earn annual interest of 1.05%. That is only a bit less than the 1.11% offered by Dime Savings Bank of Williamsburgh, a tiny New York bank that is America’s most generous deposit-taker according to Bankrate.com, a...



via The Economist: Finance and economics Business Feeds

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