Open 24/7/365

We Have A Life-Time Warranty /
Guarantee On All Products. (Includes Parts And Labor)

Goldman Sachs (And Other Banks) Sacrifice Pandemic Loans To Small Businesses And Boosts Dividend Payouts

The Senate Banking Committee is questioning whether Goldman Sachs Group Inc. paid dividends at the expense of lending to businesses and households during the pandemic as lawmakers take a broad look at the support big banks offered clients to get through the economic slump. Goldman Sachs (And Other Banks) Sacrifice Pandemic Loans To Small Businesses And Boosts Dividend Payouts

Committee Chairman Sherrod Brown and fellow Democrat Elizabeth Warren sent Goldman Chief Executive Officer David Solomon a letter late last week, asking how its banking unit made use of a temporary weakening of capital requirements last year, a move regulators intended to spur lending. The lawmakers asked him to produce data on the unit’s lending and on Goldman’s distribution of cash to shareholders.

Industry groups “have argued that these reduced capital requirements support lending to small businesses and households,” Brown and Warren wrote, according to a copy of the letter viewed by Bloomberg. “It has also been widely reported, however, that banks are devoting a smaller share of their resources to lending for small businesses and households.”

The inquiry is part of a broader debate over whether U.S. banks are offering enough credit to help the economy rebound. As individuals and companies sought loans to get through Covid-19 lockdowns last year, federal regulators temporarily let big banks reduce the amount of capital needed to support their activities. But, by some measures, bank lending declined to record lows as firms piled up cash and securities effectively guaranteed by the federal government, Federal Reserve data show.

“Throughout the pandemic, Goldman has provided a wide variety of financing to all of its clients — from consumer loans, to traditional corporate loans, and equity and debt financing in the capital markets,” company spokesperson Andrew Williams said. “Across all financing categories, volumes were up, and we are proud to have helped our clients and customers through an unprecedented and challenging year.”

Goldman’s bank subsidiary last year increased total loans and lending commitments by 10% to $236 billion, according to an annual company report. But deposits, a key source of funding to make loans, increased 29%. That gap is found across the broader U.S. banking system, which increased loans by just 3% even as deposits jumped 22%.

Brown and Warren previously criticized federal banking regulators for loosening rules to let big U.S. banks borrow more while simultaneously reducing capital by buying back shares or paying dividends to shareholders.

Among their questions for Solomon, the pair asked if Goldman loosened its underwriting to make more loans to borrowers with dings on their credit reports, and whether the bank provided cheaper credit to its customers. They asked him to respond by March 26.

Banks Are Expected To Pare Back The Cash Stockpiles They Built Up To Cover Pandemic-Era Loan Losses

U.S. banks are sitting on a pile of cash that could turn into billions of dollars of profits.

In the coming months, banks are expected to free up tens of billions of dollars in reserves they set aside to cover soured loans—losses that still haven’t materialized a year into a pandemic that shut down swaths of the U.S. economy.

In 2020, banks rushed to build up their stockpiles to cover losses on the assumption that consumers and businesses would default on their loans after government stimulus ran out. U.S. banks had $236.6 billion in total reserves in December, according to the Federal Deposit Insurance Corp., nearly double their level from before the coronavirus upended the economy and sent unemployment up sharply.

Bank executives aren’t so worried anymore. The economy has outperformed banks’ internal forecasts. Vaccine distribution is ramping up. And a $1.9 trillion stimulus package was signed into law last week.

Consumers and businesses, they now say, likely have dodged the pandemic’s worst-case financial scenario.

“There are a lot of positive reasons to feel good about the path to recovery,” Citigroup Inc. Chief Financial Officer Mark Mason said at the Credit Suisse financial-services conference last month.

Citigroup, he said, likely will reduce its $27.6 billion pile of reserves in the first quarter, potentially by more than the $1.5 billion the bank freed up in the fourth quarter.

Reserves are meant to cover expected losses on loans. They subtract from a bank’s profit when they are put in place and add to it when they are removed.

Since the start of the year, analysts have lowered their loan-loss projections and lifted the combined 2021 profit forecast for JPMorgan Chase & Co., Bank of America Corp. , Citigroup and Wells Fargo & Co., by 10%, or $7 billion, according to FactSet.

Analysts now expect the four banks to earn $77 billion in 2021, up from $61 billion last year.

The improving outlook has lifted bank stocks out of the doldrums. The KBW Nasdaq Bank Index is up 26% for the year to date, while the S&P 500 has risen 5%.

Still, reserve releases will provide only temporary relief. Revenue is expected to decline slightly at the four biggest U.S. banks in 2021, a result of an expected drop in lending and a slowdown in market activity.

“It’s ink on paper,” JPMorgan Chief Executive Jamie Dimon told analysts in January about reserve releases. “We’re cheering that America’s doing better, but we don’t consider that earnings.”

Banks set their loan-loss expectations using broad economic gauges, particularly gross domestic product and unemployment rates. From that starting point, they factor in hundreds of other variables, with some leeway built in for how optimistic or pessimistic executives feel.

Since the start of the pandemic, bank executives have tended toward pessimism when setting aside loan-loss reserves. As a result, their internal models offer a more muted outlook than broader economic forecasts.

The Organization for Economic Cooperation and Development recently said it expects U.S. gross domestic product to grow 6.5% this year, double its December forecast. Economists are projecting unemployment, now down to 6.2%, to keep falling to 5% by December, according to a Wall Street Journal survey.

The improving economic outlook led banks to release some reserves in the fourth quarter. Executives said then they would need more clarity around consumer sentiment and other economic gauges before paring them back further.

As the Credit Suisse conference in late February, executives said the economy’s trajectory is becoming clearer. While they remain cautious, some pointed to a decline in consumer debt and an increase in spending as positive signs for the economy.

“Time will tell if this is an inflection point, but it is reason to be optimistic,” JPMorgan CFO Jennifer Piepszak said.

An accounting-rule change last year has further complicated the task of calculating reserves. Banks now have to record expected future losses as soon as a loan is issued, rather than wait for evidence that losses are likely.

Bank executives are still hesitant to explain what normal, nonpandemic reserves would look like under the new rules, said Credit Suisse analyst Susan Roth Katzke, who interviewed many of them at the conference last month. Without that information, it is difficult to predict how much they will release in the coming quarters.

“I’m more interested in learning the size of the reserves going forward,” she said.

Updated: 8-26-2021

Goldman Wins Class-Action Appeal For Investor Fraud Suit

Goldman Sachs Group Inc. won an appeal of class-action status for a case that accuses the company of misleading shareholders by masking conflicts of interest in mortgage-backed securities it sold.

The federal court of appeals in New York Thursday threw out a lower-court ruling allowing the case to proceed as a class action on behalf of shareholders. The court said it was following a June ruling by the U.S. Supreme Court in the case.

The case is Arkansas Teacher Retirement System v. Goldman Sachs, 18-03667, Second U.S. Circuit Court of Appeals (Manhattan).

Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,Goldman Sachs Sacrifices Pandemic,

Related Articles:

Ultimate Resource For Biden’s Infrastructure Plans

China Throws Shade On Biden’s Bid To Shift U.S. Supply Chains

Biden Pleads For Democracy Over Autocracy, Repudiating Trump

China Has An 800,000-Square-Mile ‘City’ In The South China Sea

Senate Moves Forward With Biden’s $1.9 Trillion Covid-19 Relief Plan

The $2.1 Billion Case For Building A Federal EV Fleet

Cathie Wood Amasses $50 Billion And A New Nickname: ‘Money Tree’

US Productivity Falls 4.8% In The 4Th Quarter To Mark Biggest Drop Since 1981

Senate Democrats Move To Put Biden $1.9 Trillion Stimulus Plan On Fast Track

Biden Lays Out His Blueprint For Fair Housing

McConnell Says He’ll Make Deal, Backs Off On Filibuster

Biden’s Student Loan Freeze Shows Path To Erase Billions Of Debt

Trump Leaves Town An Outcast, Trailed By Record Pandemic Deaths And Job Losses

Trump Turned Republicans Into Losers

Trump Ends Historically Unpopular Presidency With 34% Approval

After Capitols Become Fortresses, Far-Right Protesters Are Mostly A No-Show

Bank of America Sued Over EDD Unemployment Debit Card Fraud #GotBitcoin

Civil Rights Groups Warn Of A Grim Future For Black Voters Without Court Intervention

Internet Detectives Make Up To $1000 Identifying Pro-Trump Rioters. Some Have Already Been Fired

CEOs Consider Ways To Smooth Biden’s Presidential Transition, Including Holding Back Campaign Money

Cash-Strapped Americans Are Drawing Down Savings As Pandemic Divisions Widen

Democrats Take Senate Control With Georgia Wins

Financial Inequality Grouped By Race For Blacks, Whites And Hispanics

Google Staff Launch Union, Escalating Tension With Leaders

China Tells Inefficient Firms To Toughen Up Or Prepare To Fail

Nigerian Stocks Head For Best Annual Run Since 2013

The Goldman Sach’s Solution Could Work Out Fine For Alibaba’s Jack Ma

Investors Double Down On Stocks, Pushing Margin Debt To Record

Trump Signs Virus Relief Bill After Deriding $600 Checks

How The Central Bank Collapse Will Likely Play Out #GotBitcoin

Housing Boom Brings A Shortage Of Land To Build New Homes

Africa’s Richest Man Initiates Nigeria’s First Share Buyback

No Matter What Congress Does, 12 Million Jobless Americans Will Temporarily Lose Unemployment Benefits

Mar-a-Lago Neighbors Tell Trump That They Don’t Want Him To Live There

Trump Strutted Like A Player, Then He Got Played

Meet The Electoral College, America’s Most Important Voters

Supreme Court Rejects Texas Challenge To Biden’s Victory In Presidential Election

Unsold US Hotel Rooms Near 1 Billion As Lodging Crisis Deepens

Hunter Biden Says His Taxes Are Under Investigation

Lawyers Across The Country Urge Bar Associations To Investigate Trump’s Legal Team

Did Rudy Giuliani Fart Twice At A Michigan Election Fraud Hearing?

‘Jim Crow’ Land Ownership Spurs Black Farmers’ Appeals To Biden

Can President Trump Pardon Himself And His Family?

Historians Sue To Force Trump Administration To Preserve Records

Bribes For Presidential Pardons Scheme Investigated by DOJ

Why Withholding Evidence Until They (Giuliani/Trump) Gets To The Supreme Court Is A Stupid Idea

Pro-Trump Group Donor Sues Administration Over Failure To Expose Election Fraud

Giuliani Drops Sidney Powell As Trump ‘Strike Force’ Splits

Joe Biden The Oldest President Ever Will Help Young Americans Confront A Generational Wealth Gap

Biden Asks For Donations To Fund Transition

Governor Cuomo Gets Emmy For ‘Leadership’ During Pandemic. Trump Gets Nada, Zip, Bumpkis, Zelch!!

Fed To Return Lending-Backstop Funds To Treasury As Requested #GotBitcoin

Thriving New York Times, Fox News Ponder A Post-Trump Scenario

Trump Unveils ‘Platinum Plan’ For Black Americans (BS!!!) #GotBitcoin

The Record Economic Boom Is A Mirage! Just More Trump BS! Keep Moving #GotBitcoin

US States Face Biggest Cash Crisis Since The Great Depression (#GotBitcoin?)

Factory Jobs Still Head Offshore Despite Trump Promises Including Commerce Secretary’s Auto Parts Company

Trump Issues Executive Order Making Some Civil Servants Easier To Hire And Fire

Black Homeowners Pay $13,464 More On Their Mortgages, Study Says

Trump Weighs Prospect Of Defeat After Insulting Both Seniors AND Women

Wealthy Nations Defy Trump With Debt Lifeline To Ailing Cuba

Who Is Helmut Norpoth And Why Does He Say Trump Will Win Big?

Companies Raise Inability-To-Pay Claims Amid Pandemic, Justice Department Official Says

Homeland Security To Grant Millions To Groups To Combat White Supremacists And Other Extremists

Prediction (Betting) Market Doubts Trump Will Complete First Term After COVID-19 Diagnosis

Trump Used Facebook To Try And Convince 3.5 Million Black Americans Not To Vote In 2016

Trump’s Tax Revelation Destroys Successful Business Mogul Image

Cost Of Racism: U.S. Economy Lost $16 Trillion Because Of Discrimination, Bank Says

Bloomberg, Others Rack Up $20M To Register 32K Florida Felons Deeming Them “Time Served”

Some Wealthy Americans Are Already Prepping Their Finances For A Joe Biden Presidency — Here’s How

Kamala Harris Woos Black And Latino Voters As Joe Biden’s Running Mate

Biden Appeals To Florida Latinos As Polls Show Trump Gaining

Poll: Should Trump As A Civilian Face Class-Action Lawsuits For Minimizing Severity Of Covid19?

Trump As A Civilian To Face Avalanche Of Lawsuits!!!!

Trumponomics Forces Amazon Drivers To Hang Cellphones From Trees Desperate To Get Gigs

Trump Is Silent While Russian Navy Conducts Biggest Drills Near Alaska Since Soviet Era

Open Letter To Supporters of The Draft-Dodger-In-Chief!

Right-Wing Facebook MEGA-Troll Wall-Of-Shame

Donald Law And Order Trump Encourages People In North Carolina To Vote Twice, Which Is Illegal

Here’s Why No Bankers Go To Jail (#GotBitcoin?)

Cities With Republican Mayors Also Had Protests Which Resulted In Property Damage

Trumponomic’s Furloughs Turn Into Permanent Job Losses (#GotBitcoin?)

Trump White House Commits Multiple Hatch Act Violations In Re-Election Attempt

After Three Years of Attacking L.G.B.T.Q. Rights, Trump Suddenly Tries Outreach

Scrapping Payroll Tax Without Replacement Would Hit Social Security Benefits By 2021 (#GotBitcoin?)

Boomers And Millennials Facing The Effects Of Trumponomics While Still Recovering From Last Recession

Money Funds Waive Charges to Keep Yields From Falling Below Zero (#Bitcoin?)

Millions of US Jobs To Be Lost For Years, IRS Projections Show (#GotBitcoin?)

Kellyanne Conway To Leave White House As Trump Divisiveness Indeed Hits Close To Home

The US National Debt Has Exceeded The Total Value Of The GDP (#GotBitcoin?)

When The Stock Market And Economy Becomes Disconnected (#Bitcoin?)

Donald Trump, Peter Navarro (Trade Adviser) And A $765 Million Loan To Kodak That Deal Blew Up

Steve Bannon Joins Six Other Criminally Charged Ex-Trump Advisers

Trump Calls For Goodyear Boycott Amid Outrage Over ‘MAGA’ Ban

Trump’s Big Donors From 2016 Want Nothing To Do With Him This Year

State Budgets Hit Hard By Trumponomics Create A Drag On U.S. Recovery

Joe Biden-Kamala Harris Ticket Makes Debut After Historic VP Pick

Biden, Obama Release Campaign Video Applauding Their Achievements

Small Businesses Brace For Prolonged Crisis, Short On Cash And Customers (#GotBitcoin?)

Ultimate Resource For Violations of The U.S. Constitution Including “Money” And Coronavirus

Trump Campaign Forced To Use Tele-Rallies As Coronavirus Cases Surge

Roger Stone Uses Racial Slur In Live Radio Interview With Black Host

The Fed Is Setting The Stage For Hyper-Inflation Of The Dollar (#GotBitcoin?)

The Next Phase Of The Retail Apocalypse: Stores Reborn As E-Commerce Warehouses

Famous Economist Mohamed El-Erian Warns Investors To Stay Away From Zombie Companies And Zombie Markets

Republicans Alarmed By Democratic Senate Hopefuls’ Fundraising Haul

American Airlines Plans To Furlough Up To 25,000 Workers This Fall (#GotBitcoin?)

Consumer Appetite For Cars, Homes Bolsters U.S. Economy

Banks Get Ready For Wave of Recession-Led Loan Defaults (#GotBitcoin?)

32% of U.S. Households Missed Their July Housing Payments

What You Need To Know About The New Small-Business Bankruptcy Laws

Police Wrestle With Surge In Crime In U.S. Cities Amid Defunding Efforts

Here’s An Investment That Perfectly Tracks The Economy

Fed, Treasury Disagreements Slowed Start of Main Street Lending Program

When A Texas Oil Boom Goes Busts

Trump Takes Cognitive Test And Can Identify A Rhino vs A Camel

Don’t Know How Much Stimulus Is Needed? Put It On Autopilot, Some Say

Colorado Police Chief Fires Three Officers Over Reenacted Chokehold Placed On Elijah Mcclain

Republicans Give Trump Labor Day Deadline To Turn Things Around. After That, He’s On His Own

Chapter 11 Business Bankruptcies Rose 26% In First Half of 2020

Chaotic Trump Administration Plus Russian Bounty Intelligence Equals Loss Of American Lives

Supreme Court Orders Restructuring of Consumer-Finance Watchdog

Reddit, Acting Against Hate Speech, Bans ‘The_Donald’ Subreddit

Class Action Lawsuit Alleges Visa Subsidiary Violated Privacy And Data Protections Of Venmo, Stripe, Square’s Cash App, Robinhood & More

Private Equity’s Trillion-Dollar Piggy Bank Holds Little For Struggling Companies (#GotBitcoin?)

TikTok Teens Overload Trump’s Online Store With Orders Only To Abandon Shopping Cart

Bill Gates Says Trump’s Lack Of Leadership Is Making Pandemic Picture ‘More Bleak Than I Would Have Expected’

Fed Stress Test Finds U.S. Banks Not Healthy Enough To Withstand “Few Quarters” Economic Downturn

Elizabeth Warren Was Right About Whacky Stockmarket Fundamentals (#GotBitcoin?)

Two Of The Latest High-Profile Trump Resignations

US Banks Have Seen A Record $2 Trillion Surge Of Deposits Since The Coronavirus Crisis Began

Our Facebook Page

Your Questions And Comments Are Greatly Appreciated.

Monty H. & Carolyn A.

Go back

Leave a Reply