Goldman Sachs wants to be a Main Street bank for regular people

Happy days ahead?
Happy days ahead?
Image: Reuters/Natalie Behring
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Goldman Sachs is going mainstream.

The bank said Thursday (Aug. 13) it is acquiring GE Capital’s US online-banking business, along with $16 billion in online savings accounts and other deposits. The terms of the deal were not disclosed.

The move comes as General Electric is trying to get out of banking and finance by getting rid of its credit cards, loans, and deposits for businesses and everyday consumers. (GE plans to dispose of most GE Capital assets except those related to its industrial businesses.) Meanwhile, Goldman Sachs is moving in the opposite direction.

Goldman is better known for its Wall Street dealmaking and advising the rich and powerful. It began transforming itself into a more conventional bank after the 2008 financial crisis pushed it to become a deposit-taking, bank-holding company regulated by the Federal Reserve.

In a bid to create even more consumer products, it hired a former Discover executive earlier this year to start a new, online consumer-lending business with an eye toward credit-card financing and making loans to everyday borrowers for things like home remodels.

The deal to acquire GE’s online deposits further positions Goldman as a mainstream bank. The additional $16 billion in savings accounts and certificates of deposit give it a ”diversified and stable funding source,” the company wrote in a memo to employees Thursday.

In the memo, the bank said the transaction was independent of its expansion into digital-banking services for consumers and small businesses. It said it ”seriously considered” over several years building its own online platform to diversify its funding sources and bring more stability to its banking operations. It didn’t explain why the bank didn’t pursue those considerations.