Written by by TYLER DURDEN at zerohedge.com
Six years ago, when we first described Goldman’s catastrophic foray into consumer banking, we joked that the Goldman of 2008 would be shorting the Goldman of 2018 for that ridiculous idea.
Fast forward to today when the joke is indeed on Goldman, and the bank’s losses on its now defunct subprime, pardon, consumer lending unit have hit the stratosphere: according to the WSJ, Goldman is still looking to exit its partnership with Apple as losses continue to mount, and the bank is set to take a $400 million hit this quarter due to its floundering consumer business.
Speaking at a conference this week, Goldman Sachs CEO David Solomon explained that this $400 million hit comes from two primary things: selling off its General Motors credit card partnership and selling real estate loans. According to the report, the GM card business will be sold to Barclays, with around $2 billion in card balances.
In total, Goldman Sachs has lost a staggering $6 billion pre-tax since the beginning of 2020 “on a big chunk of its consumer-lending businesses, including its credit cards”, a sad confirmation of our 2018 warning. Several factors contribute to Goldman’s massive losses associated with Apple Card, including lax underwriting standards and the resulting charge-off rates that are nearly double those of other credit cards.