Why the Vampire Squid Wants Small Depositors’ Money in 1 Frightening Chart

Wall Street on Parade ^ | 27 | Pam Martens and Russ Martens

[Lorianne]

Historically, what smells like money to Goldman Sachs has been eight-figure money and higher. As recently as 2013, the New York Times reported that Goldman had a $10 million minimum to manage private wealth and was kicking out its own employees’ brokerage accounts if they were less than $1 million. Now, all of a sudden, Goldman Sachs Bank USA is offering FDIC insured savings accounts with no minimums and certificates of deposits for as little as $500 with above-average yields, meaning it’s going after this money aggressively from the little guy. What could possibly go wrong?

So why this generous move now by Goldman Sachs Bank USA to offer above average returns to the little guy? It likely has a lot to do with the chart below from the Office of the Comptroller of the Currency’s (OCC) December 31, 2015 report on the four largest banks based on derivatives exposure. According to the report, the credit exposure from derivatives versus the bank’s risk-based capital is as follows: JPMorgan Chase 209 percent; Bank of America 85 percent; Citibank 166 percent and Goldman Sachs (wait for it) – a whopping 516 percent.

Not to put too fine a point on it, but you might recall that one of the key promises of the Dodd-Frank financial reform legislation was that after the largest bank bailout in financial history in 2008, these derivatives were going to be pushed out of the insured bank into bank affiliates that would not endanger the taxpayer-backstopped deposits and force another monster taxpayer bailout in the next crisis. This became known as the “push-out rule” which could never seem to materialize into a hard and fast law. Then, in December 2014, Citigroup simply used its muscle to legislate the rule out of existence.

[Lorianne]

The Obama administration also promised that Dodd-Frank would put an end to these trillions of dollars of opaque derivatives being traded in the dark between firms as private contracts (over-the-counter). Dodd-Frank promised to bring them into the sunshine at central clearinghouses. But the December 2015 report from the OCC makes clear that’s just another failed promise, stating:

“In the first quarter of 2015, banks began reporting their volumes of cleared and non-cleared derivatives transactions, as well as risk weights for counterparties in each of these categories. In the fourth quarter of 2015, 36.9 percent of the derivatives market was centrally cleared.”

[DesertRhino]

Well I think it’s kinda thoughtful. Now GS has found a way for us to mail our money to them directly instead of having us pay it in taxes first. Very convenient!

[sparklite2]

Above average return on savings? What would that be ... half a percent?

[mac_truck]

If Goldman Sachs wants depositor money than negative interest rates must be closer to reality in the USA than we think.

[thoughtomator]

Bail-ins are planned, and those banks that don’t hold deposits won’t be authorized to steal them. And Goldman never saw a financial crime it didn’t want to be the world’s champion in.

[faithhopecharity]

my banker kept calling and emailing me for months.. trying to get me to open a savings account.
she said i would earn more interest than in checking

i finally asked her and she said, 0.003% instead of 0.002%

I excused myself courteously and put the phone down firmly in its cradle...

she hasn’t bothered me with this BS since, ha!

[Rurudyne]

GS: “Do you ever dance with the devil in the pale moonlight?”

[buckalfa]

The Glass-Steagle Act of 1933 in my book was really a good idea. I know the arguments that the law restricted capital formation, but highly concentrated capital leads to high risk in the banking industry and gives ammunition to those crusading against income inequality. Goldman Sachs as an institution scares me.

[PAR35]

Per Bankrate, 1% on a 12 month CD with a $500 minimum. BBVA Compass is beating that locally with 1.15% on the same minimum (in Dallas. Only 1.05% in Plano). Other folks start at a $1k minimum.

[sparklite2]

Amazing. Would you loan someone $500 for a year and only charge five dollars? What a world.

[DakotaGator]

This is how it always works; banking institutions collude with governments to control all sources of money. Then as the end game nears they engage in one last frenzy of activity to suck money out of the pockets of the common man, converting it to real wealth vice fiat currency.

Then comes at least currency and many times financial system collapse. This is followed by war as governments frantically try to find a way out of the mess they created.

Yes. Governments and banks are coming for your money. When the crisis hits, if you have any money in “the bank”, it will be confiscated. There will be all sorts of names for this confiscation. But the result is the same; You lose.”

[jimpick]

The best thing I have found to increase my income in the future is to buy bulk when it is on sale. Then saving it for future use.

So say I use a roll of aluminum foil per month. I buy 24 when they are 20 to 30% discounted and use them over the next two years. Not only do I save the 20 to 30% but as ghe price goes up I save that as well.

If I am going to buy it I might as well save money. And this is a much better return than putting it in the bank where it loses value.

I dont trust the stock market with brokers getting faster access. And I dont trust banks like Goldman Sachs. It seems to be rigged against the smaller investor. So I will just buy what I need in advance and save the money.

[sparklite2]

You can’t win, you can’t break even,
and you can’t get out of the game.

[sparklite2]

Good advice.

[Osage Orange]

Personally speaking....I've not had a broker for years.

Secondly don't trust the major banks....ever.

[PAR35]

Well, given that BofA and Wells Faggo will offer you 0.05% and JPM Chase will offer 0.01% on that one year CD (BofA and Chase $1k minimum, Wells $2.5k minimum), Goldman’s rate doesn’t look too bad.

Just saw something weird. BBVA is on the list twice. Once at the 1.15 rate, and again with a 0.10 rate, each with the $500 minimum on a one year CD.

[sparklite2]

It’s crazy. I took out a $10,000 money market certificate with Bank of America, and after a year, got enough for a cup of coffee. For people on fixed incomes, there is virtually no interest income and if they aren’t diversified into stocks, the retirement funds must have an unexpected burn rate.

[PAR35]

That’s why the international banksters are whipsawing the market - trying to scare the older folks on fixed income into selling low. Individuals can never out-trade the New York brokers. After a few see-saws, they figure folks will just try to protect principal by parking money in the banks at no interest, or buying an annuity so the big boys can make some fee income.

[PAR35]

I would suggest that if you have some money to park, Bankrate can be useful. Just keep it under the insured limits, as generally the folks paying the most are chasing deposits to keep the regulators at bay.