WASHINGTON — The Federal Reserve Board said Monday that it would reopen its public comment period on Goldman Sachs' pending acquisition of roughly $16 billion in online deposits from GE Capital, citing a need for greater public examination of the deal.
The central bank said it would accept additional comment through Oct. 30. The earlier comment period had run from Aug. 19 through Sept. 19. The New York Department of Financial Services, which is also reviewing the deal, announced on Sept. 24 that it would be extending its comment period by an additional 30 days, to expire on Oct. 28.
The Fed said that it had chosen to extend its public review period "in light of the standards the Board must consider in reviewing the proposal under the Bank Merger Act" — standards that it said include "the convenience and needs of the communities to be served, the effects of the proposal on the stability of the U.S. banking or financial system, the financial and managerial resources and future prospects of the institutions involved in the proposal, and competition in the relevant markets."
Goldman's acquisition of GE's online deposits was supposed to be a win-win for both banks. GE announced in April that it would shed its financial arm, GE Capital, in order to get out from under the systemically important financial institution designation that it had been assigned in 2013 by the Financial Stability Oversight Council. Goldman, meanwhile, sought out GE Capital's deposits in order to make a tactical move away from its investment bank profile and toward more commercial banking activities.
But many consumer groups blasted the deal, saying that it is just another opportunity for a Wall Street megabank to get bigger. The National Community Reinvestment Coalition, a public interest advocacy group, sent a letter to the Fed on Sept. 19 calling for an extension of the comment period and a public hearing on the deal. The NCRC said the details of Goldman's Community Reinvestment Act obligations and plans for extending services to underserved communities — among other details — was either redacted or insufficiently specific.
NCRC President John Taylor said that the Goldman-GE deal is an important opportunity for the Fed to require a large, globally important bank to make concrete and verifiable commitments to extend services to low- or moderate-income communities with few traditional banking resources of any kind.
"Clearly, challenging banks like Goldman Sachs … [to make] a forward commitment to serve underserved neighborhoods, that's what this is all about," Taylor said. "Not to give money away, but to invest in underserved people safely soundly, responsibly."