The Federal Reserve has opened an investigation against Goldman Sachs’ digital bank that provides consumer credit. The American Central Bank is examining whether Goldman increased the provision of online loans to consumers without appropriate supervision and control measures – so reports the “Wall Street Journal”, relying on sources close to the issue.
The Fed is looking into whether special management problems were discovered at Marcus, if there were special cases of customer harm, and if these were properly resolved. Bloomberg previously reported that the Fed was looking into Goldman’s consumer business.
The Marcus digital bank was launched with great fanfare in 2016 and mainly provides personal loans to private individuals as well as investment products such as high yield savings accounts, deposits and more.
Goldman, known for 150 years as catering primarily to the rich and powerful, made a strategic shift when it decided to enter the mass consumer credit business dominated by rivals such as JP Morgan and Bank of America.
Goldman invested billions of dollars in Marcus, named after the bank’s founder, but has now decided to scale back its consumer activities as part of a broader change in its business.
The bank is ending personal loans and scrapping plans to widely offer a checking account. “We tried to do too much, too fast,” Chief Executive David Solomon said of the consumer business on a call with analysts earlier this week.