Goldman Attacks Occupy Wall Street's Non-Profit Bank
When Goldman got huffy at a credit union honouring OWS and pulled its anniversary dinner funding, much more was at stake
Exclusive for The Guardian
With Arun Gupta, founding editor of The Occupied Wall Street Journal.
[Zuccotti Park, Wall Street, New York.]
Mega-bank Goldman Sachs (assets $933 billion), has declared war on one of the smallest banks in New York (assets $30 million), the customer-owned community bank that happens to also be the banker for Friends of Liberty Plaza, Inc, also known as Occupy Wall Street. And you thought Goldman didn't care.
The trouble began three weeks ago when the occupiers suddenly found their donation buckets filling with thousands of dollars, way more than needed for their pizza dinners. Suddenly, the anti-bank protesters needed a bank. Citibank and Chase certainly wouldn't fit. So OWS opened an account at the not-for-profit Lower East Side Peoples Federal Credit Union. Peoples has a unique federal charter - designated to open accounts for low-income folk from all over NewYork, available to those families earning less than $38,000 per year. (Disclosure: the CEO of the Peoples bank is my dearly beloved ex. But that's another story.)
Goldman Sachs had also joined up with the Peoples bank. Goldman partners reportedly earn a bit more than $38k per annum, yet Goldman's association so far was limited to giving the credit union $5,000 toward the little bank's 25th anniversary celebration dinner. Goldman's largesse was acknowledged on the dinner invites - along with the night's honoree: Occupy Wall Street.
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.
In 2008, the US Treasury handed Goldman Sachs a check for $10 billion from the Troubled Asset Recovery Program (Tarp), the bailout funds given to desperate commercial banks. A few eyebrows were raised: Goldman was not desperate, and it certainly was not a commercial bank. Yet - abracadabra! - Secretary of the Treasury Henry Paulson transformed investment bank Goldman into a commercial bank overnight. (Paulson's prior post was chairman of Goldman Sachs. Just saying.)
But there was a catch: Goldman would have to return a chunk of the public's billions in the form of loans for low-income customers and members of its "community", as required by the Community Reinvestment Act (CRA) of 1977. 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.