By Yves Smith
I suppose there is no point in being part of the 1% unless you can throw your weight around.
Greg Palast writes in the Guardian of how Goldman took a wee bit of revenge on Occupy Wall Street via the itty bitty credit union ($30 million in assets) that OWS chose for its bank account, Peoples Bank. Peoples has “a unique Federal charter”. It focuses on low income customers, meaning families with less than $38,000 in income (to get to how far that goes in the rest of the US ex maybe San Francisco, reduce that amount by at least 30%).
Goldman had donated $5,000 as a sponsor of a 25th anniversary party for the bank. So far, so good, until someone at Goldman gets wind of the fact that the invitations include its name along with that of other donors, as well as the honoree: Occupy Wall Street. Now to Palast:
“When a Goldman exec saw its gilded name next to Occupy Wall Street, the financial giant expressed much displeasure. In fact, my sources say, Goldman threatened legal action unless the credit union gave up the $5,000 and reprinted the invite sans the Sachs moniker. Goldman Sachs did not respond to our requests for comment on the affair.
“So far, it’s a cute story: tiny bank uses Goldman’s money to fete some tent-dwellers who are denouncing Sachs as the Giant Vampire Squid.
“But there’s a lot more at stake in this battle than a $5,000 donation gone wrong. Underneath, it’s a battle royal for control of tens of billions of dollars in government mandated ‘community reinvestment’ funds.”
Yves here. Yes, sports fans. When Goldman became a bank during the crisis, it became subject to CRA. Back to Palast:
“Problem: Goldman has, it seems, no low-income customers, nor a ‘community’. Goldman was directed to find poor people and a community and hand over some cash.
“So Goldman looked down from its riverfront tower in lower Manhattan and discovered Peoples. Over 80% of Peoples member-owners have low incomes. At least 65% are Latino.”
Yves again. So Goldman got a twofer with Peoples. At least prior to the OWS association, it thought it was satisfying some pesky regulatory requirements and buying some cheap PR. Back to the article:
“Goldman did draw the line. And other bankers are stepping back across it, too. Capital One also pulled its name off the dinner invites.
“Goldman has so far only passed out its legally-required CRA funds with an eye-dropper: the $5,000 for Peoples (now withdrawn), and a few other dabs here and there. The big cash investments from the Goldman fund are dangling, hoping to lure only those community banks and low-income funds that will dance to Goldman’s tune. My sources told me that Goldman’s ‘Urban Investment Group’ representative had stated in a phone conversation that Occupy’s credit union will never get another dime from any big bank, but, again, Goldman refused to speak with me to confirm or deny this.
“Peoples’ [Chairman} Del Rio dismisses such threats, but I don’t. These Community Reinvestment funds ultimately come from public pockets, so why should the titans of Wall Street be allowed to bully community credit unions, which are answerable to their members, not Goldman’s partners?”
This low grade thuggish behavior over a mere $5,000 illustrates how deeply narcissistic Wall Street has become. Anything that threatens their image, no matter how small, must be beaten back. Goldman could have been punitive (by threatening never to do anything for the bank ever again) without going to the ridiculous step of threatening litigation over a charitable contribution. How charitable is it, exactly, when you try to attach retroactive conditions?
Unfortunately, I doubt this heavy-handed move will backfire to the degree that its efforts to shut down the website Goldman666 did. But they deserve ample ridicule over this boneheaded and abusive ploy.