Goldman Sachs has applied for a New York State bank charter, unlike most of its nationally chartered rivals.
The New York Times explains that this means you aren’t likely to get a Goldman checking account soon:
“Goldman’s state charter, if approved, would set it apart from its direct competitors — Morgan Stanley, Citigroup, JPMorgan Chase and Bank of America. Those banks operate under a national banking charter, allowing them to open branches across states without separate applications. Goldman’s decision could indicate that the firm is not interested in national consumer-focused business — which will differentiate it from its peers. Goldman is expected to focus on managing assets for high-net-worth individuals rather than providing retail banking services.”
Is there something more to this? It’s possible that the regulatory costs and fees involved with chartering are lower under the state charter than the national charter. We can’t help that Goldman is doing something incredibly clever but we don’t know enough about banking regulations to have any clue what that might be. If you know anything, drop us a line or leave a comment.
Update: We haven’t dug anything up yet in our investigation into what sort of regulatory arbitrage Goldman might be attempting but we have a theory. Presumably, Goldman has a lot more leverage with New York State regulators than federal regulators. It can, for instance, hold the NY regulators hostage with the threat of leaving the state. That doesn’t work as well for the federal government. So could it be that Goldman thinks it will have more regulatory leeway with the local regulators?
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