Sachs Fiend: Goldman Attacks Occupy Wall Street's Non-Profit Bank When Goldman got huffy at a credit union honoring OWS and pulled its anniversary
dinner funding, much more was at stake By Greg Palast (author of Vultures' Picnic: In Pursuit of Petroleum Pigs, Power
Pirates, and High-Finance Carnivores, out on November 14, 2011)
With Arun Gupta (founding editor of The Occupied wall Street Journal)
[October 27, 2011: Zuccotti Park, Wall Street, New York]
Mega-bank Goldman Sachs (assets $933 billion), has declared war on one of the smallest
banks in New York (assets $30 million), the customer-owned community bank that happens
to also be the banker for Friends of Liberty Plaza, Inc, also known as Occupy Wall Street.
And you thought Goldman didn't care.
The trouble began three weeks ago when the occupiers suddenly found their donation
buckets filling with thousands of dollars, way more than needed for their pizza dinners.
Suddenly, the anti-bank protesters needed a bank. Citibank and Chase certainly wouldn't
fit. So OWS opened an account at the not-for-profit Lower East Side Peoples Federal
Credit Union. Peoples has a unique federal charter - designated to open accounts for
low-income folk from all over New York, available to those families earning less than
$38,000 per year. (Disclosure: the CEO of the Peoples bank is my dearly beloved ex.
But that's another story.)
Goldman Sachs had also joined up with the
Peoples bank. Goldman partners reportedly
earn a bit more than $38k per annum, yet
Goldman's association so far was limited to
giving the credit union $5,000 toward the little
bank's 25th anniversary celebration dinner.
Goldman's largesse was acknowledged on the
dinner invites - along with the night's honoree:
Occupy Wall Street.
When a Goldman exec saw its gilded name next
to Occupy Wall Street, the financial giant
expressed much displeasure. In fact, my sources say, Goldman threatened legal action
unless the credit union gave up the $5,000 and reprinted the invite sans the Sachs moniker.
Goldman Sachs did not respond to our requests for comment on the affair.
So far, it's a cute story: tiny bank uses Goldman's money to fete some tent-dwellers who
are denouncing Sachs as the Giant Vampire Squid.
But there's a lot more at stake in this battle than a $5,000 donation gone wrong.
Underneath, it's a battle royal for control of tens of billions of dollars in government-
mandated "community reinvestment" funds.
In 2008, the US Treasury handed Goldman Sachs a check for $10 billion from the
Troubled Asset Recovery Program (TARP), the bailout funds given to desperate
commercial banks. A few eyebrows were raised: Goldman was not desperate, and it
certainly was not a commercial bank. Yet - abracadabra! - Secretary of the Treasury
Henry Paulson transformed investment bank Goldman into a commercial bank overnight.
(Paulson's prior post was chairman of Goldman Sachs. Just saying.)
But there was a catch: Goldman would have to return a chunk of the public's billions in the
form of loans for low-income customers and members of its "community", as required by
the Community Reinvestment Act (CRA) of 1977. Problem: Goldman has, it seems, no low-
income customers, nor a "community". Goldman was directed to find poor people and a
community and hand over some cash.
So Goldman looked down from its riverfront tower in lower Manhattan and discovered
Peoples. Over 80% of Peoples member-owners have low incomes. At least 65% are Latino.
For the big money-center banks, the CRA is good deal. They pay some blood money into
community banks and offload their low-income customers. Indeed, bank branches
catering to the carriage trade often hustle would-be customers from housing projects
out the door with an admonition to take their undesirable business to Lower East Side
Peoples.
Goldman's circuits blew when the credit union's management appeared in Zuccotti Park
to endorse Occupy Wall Street's call to "Move Your Money" from commercial banks to
community credit unions. Heeding Peoples' and Occupy's call, 23 protesters marched to
their local Citibank branches to close their accounts - and were promptly arrested.
Peoples' Chairwoman Deyarina Del Rio tells me that Peoples sees itself in agreement and
alliance with the protesters' demands to radically shift the American finance system away
from profit-first to people-first banking. But not with our money, seems to be Goldman's
attitude. But of course, it's not Goldman's money but our money - effectively, the tax payer
dollars that were supposed to come back in the form of loans in return for the Tarp bailout.
The billions of dollars in CRA funds (Citibank alone
committed $115 billion over ten years) have given
community banks tremendous political authority
at the local level. Notably, Congresswoman Nydia
Velasquez will be honored alongside Occupy Wall
Street at the credit union's November 3 dinner.
"We didn't mean to draw a line in the sand with
Goldman," Peoples Chairman Del Rio told me,
standing inside the bank's vault, the only place in
the cramped back office with room to meet.
But Goldman did draw the line. And other bankers
are stepping back across it, too. Capital One also pulled its name off the dinner invites.
Goldman has so far only passed out its legally-required CRA funds with an eye-dropper: the
$5,000 for Peoples (now withdrawn), and a few other dabs here and there. The big cash
investments from the Goldman fund are dangling, hoping to lure only those community
banks and low-income funds that will dance to Goldman's tune. My sources told me that
Goldman's "Urban Investment Group" representative had stated in a phone conversation
that Occupy's credit union will never get another dime from any big bank, but, again,
Goldman refused to speak with me to confirm or deny this.
Peoples' Del Rio dismisses such threats, but I don't. These Community Reinvestment funds
ultimately come from public pockets, so why should the titans of Wall Street be allowed to
bully community credit unions, which are answerable to their members, not Goldman's partners?
[Greg Palast is the author of Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates and High-Finance
Carnivores, which will be released on November 14 by Penguin USA. For more information about Palast's
brand new book and his book-signing events in your city, go to www.VulturesPicnic.org and GregPalast.com]
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