Goldman Sachs: An Expensive Lesson in Credit Cards & Consumer Credit

It seems like a good idea back in 2016. Then three years later, Goldman Sachs made a mark in credit cards by winning the Apple Card from Barclays. With a goal of driving credit cards for iPhones, Goldman may have taken a bit of a risk. And now, with an uncertain economy, there are risks, risks, and more risks.

200 West Street in Manhattan is reeling from credit problems as the economy begins to roll. According to Bloomberg, Goldman Sachs is cutting jobs in its sales position, and learning how to survive a crisis, a skill mastered by top credit companies such as American Express, Bank of America, Citi, Chase, and Discover . If you have an iPhone and haven’t received your white Apple credit card, it may be too late, as it will soon be enforced by the donate their data.

Bloomberg reports:

  • Goldman Sachs Group Inc. is embarking on one of its most important jobs since it locked in a plan to cut around 3,200 jobs this week, with the bank’s leadership deeper than rivals to cut work
  • The company is also preparing to disclose earnings related to a new unit that combines its credit card and loan businesses, which will record more than $2 billion in pretax losses, according to from people, asking not to be identified as discussing personal information.

Sure, Goldman Sachs is a top investment bank in the world, but is it prepared for the credit crisis?

  • Slow down in different business lines, a expensive consumer-banking sentiment, and uncertain market and economic outlooks are prompting banks to cut rates.
  • Those general industry conditions have been compounded by the bank’s missteps in its investment-buying strategy, which has accumulated losses faster than expected throughout the year.

Successful Lenders Life and Death by Credit Score on Credit Cards

Last November, we noted that Goldman Sachs could do better in underwriting loans. It’s one thing for a mass-market credit card to tweak the FICO Score range to allow for riskier loans, but the top banks balance their risk. You can manage the risk factor by adding a few tweaks down on the credit score, along with the growth rate.

But hear me out: Don’t bet the herd on the lowest odds.

You may remember this November article from Payments Journal, as reported by CNBC:

  • While the contestants are having fun Bank of America Enjoying repayment rates at or near record levels, Goldman’s loss on credit card loans fell to 2.93% in the second quarter. This is the worst among the large American publishers and “far above the investors,” according to a letter of September 6 from JPMorgan.

And the theory of Goldman Sachs is very expensive now.

According to that same report:

  • While the contestants are having fun Bank of America In favor of repayment rates at or near records, Goldman’s loss on credit card loans fell to 2.93% in the second quarter. This is the worst among the big American publishers and “more than the investors,” according to a letter of September 6 from JPMorgan.

So, for now, prepare yourself for a market change. That shiny Apple card looks like it’s at risk. And the GM cobrand we had a battle in September, will prove interesting. Then we have to wait and see about the T-Mobile credit cards that are expected to account for 109 million records.

I have been a T-Mobile customer for 21 years and was hoping for one of those new cobrands.

Overview b Brian RileyDirector, Advisory Services at Mercator Advisory Group.

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