Goldman Sachs Wants to Buy Your Local Bank

Goldman Sachs has your local community bank in its sights. Since last fall, Goldman Sachs has quietly purchased parts of four banks.  Another acquisition is currently pending a review by the Federal Reserve.

Here is a list of those institutions:

• Atlantic Capital Bank
• Avenue Bank
• Doral Bank
• First Marblehead Bank

The profile of these banks are all different, save for the fact that each has fallen into financial trouble. Goldman is striking when their prey is weak. Doral Bank, for instance, was a big player in sub-prime mortgage lending. First Marblehead has been one of the larger players in the private student loan marketplace. Atlantic Capital Bank was founded in 2007, with the plan of providing loans to real estate developers in the Atlanta area.

Nice plans, all of those. Now, meet your new boss.

Goldman’s next target is First National Bank of Starbuck, of Starbuck, Minnesota. Starbuck is a small bank with about $13 million in loans. Theyare one of the largest lenders in the Glenwood, Minnesota area and fairly significant in the broader area of Pope County.  About two-thirds of their activity is for small farm loans, and indeed, the OCC recognizes that they are in close competition with AgCountry Farm Credit Services.

Why does Goldman Sachs want to own a bunch of small banks?

Why would Goldman care about Starbucks? Is it for that vibrant book of business? Perhaps.  I would argue that Starbuck’s most valuable asset is its national bank charter.

The Change in Bank Control Act allows citizens to comment on acquisitions.  You can tell the OCC what you think of Goldman’s move into small banking through the federal portal for consumer comments – regulations.gov.

People worry about Wal-Mart going into banking.  They ought to worry about Goldman Sachs owning your local bank.