Did Goldman Sachs put profits before consumers?

The U.S. Federal Reserve is currently investigating the consumer lending business of Goldman Sachs to determine if the bank had adequate safeguards in place as it ramped up lending in recent years. The investigation was sparked by a standard Fed review of the business in 2021, but has since intensified into a full-fledged probe.

The central bank is particularly concerned about the lack of proper monitoring and control systems within Marcus, Goldman's consumer lending unit, as it grew larger.

The Probe

The probe is also examining instances of customer harm and whether they were properly resolved, adding to the troubles for Goldman Sachs. The investment bank's shares were down nearly 3% following the announcement of the probe.

Goldman Sachs is currently executing a strategic pivot that includes refocusing on its core trading and investment banking business after losing money in its consumer banking venture. The bank has also disclosed that its credit card business is being investigated by the Consumer Financial Protection Bureau (CFPB).

A spokesperson for Goldman Sachs stated that the Federal Reserve is their primary federal bank regulator and they do not comment on the accuracy or inaccuracy of matters relating to discussions with them.

The ongoing investigation by the Federal Reserve is a reminder of the importance of proper safeguards and monitoring systems within the financial industry to protect consumers and prevent harm. It remains to be seen what actions the Federal Reserve will take following the completion of the probe.