Cullen Roche of
Pragmatic Capitalism fame writes: In a powerful sign of tough times for the
casino business, Wall Street powerhouse Goldman Sachs is actually going to use
their bank charter to do what banks do – expand loans. According to the Wall Street Journal Goldman
is planning to substantially increase their lending arm:
“Goldman Sachs Group Inc. is building an in-house bank to
lend money to wealthy people and companies, in a significant shift that
underlines the harsh business climate facing Wall Street since the financial
crisis……”
There was a time when banking was a relatively simple
business, but what these companies have morphed into has made the business
infinitely more complex and an increasing risk to the financial system. I’m certainly not against private banking,
but I am skeptical of this idea that it’s good for the health of our banking
system (really our payments system) to be so directly tied to these companies
who now derive so much of their income from gambling related business
streams. Of course, I don’t have an
issue with gambling (I love a trip to Vegas as much as the next guy), but when
we’re threatening the stability of the entire payments system just so these
companies can expand the bottom line and increase shareholder value then you
have to start wondering if something isn’t wrong with the system. I won’t say that this move by Goldman is a
sign that we’re moving in the right direction, but one can hope…
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