Goldman Sachs has admitted to more trouble for its loss-making foray into retail banking, revealing that the US consumer credit regulator is investigating how it handles accounts in its credit card business.
In a regulatory filing Thursday, Goldman said it was cooperating with a Consumer Financial Protection Bureau investigation into “the enforcement of refunds, crediting non-compliant payments, resolving billing errors, advertisements and reporting.” to the credit bureaus” to his credit. card company.
Goldman has issued two credit cards in corporate partnerships — its flagship Apple Card and one with General Motors. Apple and GM did not immediately respond to requests for comment. The CFPB said it does not comment on confidential oversight and enforcement matters and investigations.
The CFPB investigation is a legal headache for a Goldman business that generated only about 2% of the bank’s $59 billion in net revenue last year.
He had about $12 billion in credit card balances at the end of June, up from $5 billion a year earlier. That’s dwarfed by established rivals such as JPMorgan Chase, which had $165 billion in credit card loans last quarter, mirroring Goldman’s much more recent push into Main Street banks.
Goldman, which derives the vast majority of its revenue from trading and investment banking on Wall Street, entered consumer banking in 2016 with the launch of its Marcus brand, a nod to its co-founder. Marcus Goldman.
It grew out of Goldman’s conversion during the 2008 financial crisis into a bank holding company, a move that allowed it to access Federal Reserve liquidity lines and secure US government-backed insurance for its deposits.
The consumer business, which in addition to credit cards also includes Marcus-branded savings accounts and loans, generated $1.5 billion in revenue last year. The bank aims to grow its revenue to more than $4 billion by 2024.
However, the company is still loss-making, and Goldman has yet to set a timeline for when it will be profitable. Goldman’s other three growth initiatives — asset management, wealth management and deal cooking — are profitable.
The consumer sector also went through a series of leaders. Harit Talwar, the first head of Marcus and the former boss of American cards at Discover, in 2021 handed over day-to-day management to his longtime deputy, Omer Ismail. But Ismail abruptly left Goldman for Walmart.
The consumer business is now led by Peeyush Nahar, who joined Goldman last year after working at Uber and Amazon.