Author Topic: Goldman-Sachs Consumer Lending Platform Coming this Fall  (Read 4929 times)


Fred93

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #1 on: July 19, 2016, 03:25:10 PM »
Translation: Big company says "me too... me too..." thus validating the business.

As if it needed validation.  Banks have been making consumer loans for centuries.

rawraw

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Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #2 on: July 19, 2016, 03:38:44 PM »
Exciting. If Goldman creates the securitization market, it benefits everyone

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bobeubanks

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #3 on: July 19, 2016, 05:13:20 PM »
Perhaps their were more details in the call, but I don't see that this is any different from Discover or any number of banks and credit unions who already lend via the internet.

rawraw

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #4 on: July 19, 2016, 06:00:02 PM »
Perhaps their were more details in the call, but I don't see that this is any different from Discover or any number of banks and credit unions who already lend via the internet.
Goldman Sachs isn't like Discover or any number of banks and credit unions.  Goldman Sachs is an investment bank that is now getting into commercial banking.  It's typically the other way around

dompazz

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #5 on: July 19, 2016, 08:46:14 PM »
Goldman Sachs isn't like Discover or any number of banks and credit unions.  Goldman Sachs is an investment bank that is now getting into commercial banking.  It's typically the other way around
Yup.  Consequence of the Fed forcing them to become a bank holding company during the GFC.  They are now allowed to take deposits and make loans.  They looked at personal loans and figured, "hell, those are some pretty nice, low correlated returns, we have lots of clients that would like some of that, and we now have the ability to originate them!"

bobeubanks

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #6 on: July 19, 2016, 11:47:29 PM »
Perhaps their were more details in the call, but I don't see that this is any different from Discover or any number of banks and credit unions who already lend via the internet.
Goldman Sachs isn't like Discover or any number of banks and credit unions.  Goldman Sachs is an investment bank that is now getting into commercial banking.  It's typically the other way around

But the article thinks GS is coming after LC in particular. That is really what I had a issue with: why did the article single out LC as the target?

Fred93

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #7 on: July 20, 2016, 12:06:48 AM »
But the article thinks GS is coming after LC in particular. That is really what I had a issue with: why did the article single out LC as the target?

"thinks" may be too strong a word.  I'm not sure any thought went into the article.  The writer just grabbed a news item, and conjoined it with something in his memory and created a hook.

Then he went to lunch. 

There is no evidence or logical argument in the article that shows any relationship between these two items.

AnilG

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #8 on: July 20, 2016, 02:11:21 AM »
Read the GS earning call transcript at https://finance.yahoo.com/news/edited-transcript-gs-earnings-conference-230658590.html. There was additional info in analyst Q&A. GS is planning to introduce unsecured consumer loans through its online lending platform bridging the consumer borrowers with commercial lenders. LC is the largest online lending platform for unsecured consumer loans. It is fair to make that comparison though all online lending platforms focused on unsecured consumer lending will be impacted from GS entering the market. LC being a public company, the impact on LC will be most visible and measurable. GS also specifically addressed building from scratch versus partnering/buying an online lending platform.

But the article thinks GS is coming after LC in particular. That is really what I had a issue with: why did the article single out LC as the target?
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Fred93

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #9 on: July 20, 2016, 03:02:16 AM »
From http://seekingalpha.com/article/3989543-goldman-sachs-groups-gs-q2-2016-results-earnings-call-transcript?part=single ...

Quote
I’ve emphasized—you know, we’ve emphasized a number of times that we’re going to be very deliberate and slow with this, so we’ve developed one product which we plan to launch later this fall, so that’s where we stand [indiscernible] over the next several months.

Matt O’Connor

Okay, and sorry - what is that one product? Is it an unsecured loan, or what’s the—

Harvey Schwartz

Yes, it’s an unsecured consumer loan product.

Matt O’Connor

Okay. Would they ask—I mean, target a customer of kind of short duration, small loan size, bigger loan size? What’s kind of the—

Harvey Schwartz

We’ll come back with all those details in the fall.

Matt O’Connor

Okay, fair enough. Okay, thanks for all the answers.

AnilG

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #10 on: July 20, 2016, 01:07:00 PM »
Matt Levine's take on GS entering online lending

http://www.bloomberg.com/view/articles/2016-07-20/hedge-fund-compliance-and-gloomy-banks

Quote
On the other hand:

Goldman’s Mr. Schwartz also said on Tuesday’s conference call that the firm’s long-awaited foray in online lending would kick off in the fall with the launch of an unsecured consumer loan.

Aren't unsecured consumer loans weird? They basically don't exist as a product offered by banks, but there is a lot of demand for them, as witnessed by the rise of marketplace lending firms like LendingClub that make unsecured consumer loans and then securitize them in interesting ways. One way to read Goldman's entry into unsecured consumer lending is just, like, Goldman has built a friendly Main Street bank, it wants to make helpful loans to customers, and it sees that customers want unsecured loans and can't get them from other banks. The other way to read it is that marketplace lending is the cutting edge of securitization opportunities, what the mortgage market was a decade ago, and Goldman is going where the action is.
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rawraw

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Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #11 on: July 20, 2016, 03:39:13 PM »
I love Matt Levine

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P2PFact

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #12 on: July 24, 2016, 10:30:51 AM »
GS is going to do this in close loop. Take in online depot, lend it out online as unsecured consumer loan. Then bundle those loans together, secutized then sell them in the ABS market. Every single step GS can do it alone. Plus they are FDIC insured bank with stable funding. A natural question to ask is what competitive advantage LC has that GS does not or cannot build over time? I can find none at the moment.

jz451

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #13 on: July 24, 2016, 11:50:12 AM »
GS is going to do this in close loop. Take in online depot, lend it out online as unsecured consumer loan. Then bundle those loans together, secutized then sell them in the ABS market. Every single step GS can do it alone. Plus they are FDIC insured bank with stable funding. A natural question to ask is what competitive advantage LC has that GS does not or cannot build over time? I can find none at the moment.

You could say that as well for LC vs the brick and mortar loan companies like Springleaf which I currently work for temporarily. Comparatively LC has lower rates since I routinely see 30%+ loans all day long and wonder how they get away with it when cheaper options are available.

As to comparing vs GS, LC is a P2P platform so it's more democratic in the way the returns are spread vs GS taking in all of the profits.

rawraw

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Re: Goldman-Sachs Consumer Lending Platform Coming this Fall
« Reply #14 on: July 24, 2016, 12:02:01 PM »
GS is going to do this in close loop. Take in online depot, lend it out online as unsecured consumer loan. Then bundle those loans together, secutized then sell them in the ABS market. Every single step GS can do it alone. Plus they are FDIC insured bank with stable funding. A natural question to ask is what competitive advantage LC has that GS does not or cannot build over time? I can find none at the moment.
LC offers the investments to individuals who do not have access to it, thus they are willing to pay fees for it.  Plenty of banks originate mortgage loans.  Plenty of non-banks originate mortgage loans as well.  There are reasons why both exist and it is a highly competitive market.  There are no huge moats in mortgage, just like in unsecured consumer lending.