Goldman Sachs is making it easier to plug its services into other tech platforms like Amazon or Apple’s iPhone, and an industry consultant says it shows how the bank is leading a `fundamental change’ in retail banking.

  • Goldman Sachs is in talks with Amazon about providing small-business loans to merchants who sell products on Amazon’s retail platform, according to a person with knowledge of them. The talks were first reported by the Financial Times on Monday. 
  • The partnership would be the second inked by Goldman with a large technology firm that can provide the scale and distribution for Goldman’s products that it can’t get itself. 
  • The partnership, and another one with Apple, is an example of banking-as-a-service, though some insiders have taken to calling it Goldman Sachs-as-a-service. 
  • “If Goldman can pull off an embedded banking deal somewhere else besides Apple Pay … that’s a leading indicator of a fundamental change in retail banking,” according to independent consultant Richard Crone.

Goldman Sachs is close to inking a second high-profile deal to offer banking services in partnership with a large tech company, and it’s a sign of what may be a fundamental change in retail banking. 

Goldman is in talks with Amazon to offer small business loans to merchants who sell products on Amazon, according to a person with knowledge of the discussion. The Financial Times first reported the talks on Monday. Goldman’s small business loans may feature the bank’s name and begin as soon as March, the newspaper said. 

A spokesman for the bank declined to comment. 

If the deal is signed, it would become the second Big Tech partnership for Goldman Sachs after it launched a credit card last year with Apple last year. Goldman CEO David Solomon has called the Apple Card the most successful credit card launch of all time, without providing details to back up the claim. 

But it would also be a sign of something much more ambitious: Goldman Sachs moving quickly and aggressively to leverage those characteristics that make it uniquely a bank, with a license that allows it to offer banking products and a balance sheet where it can fund loans cheaply being just two prominent examples. 

The company has been sinking hundreds of millions of dollars into building out its technology capabilities, including APIs (application programming interfaces), to make it as easy and seamless to plug such services into the technology platforms of others, whether that’s Apple’s mobile devices, as with the Apple Card, or Amazon’s retail platform. 

At an investor day last week, execs referred to it as banking-as-a-service, but some insiders have taken to calling it Goldman Sachs-as-a-service. 

Stephanie Cohen, Goldman’s chief strategy officer, appeared on stage last week at the bank’s investor day alongside Marco Argenti, the co-chief information officer who recently joined the bank after several years as a senior exec at Amazon Web Services.

Cohen said the bank is looking for ways to use technology to embed the types of things that Goldman can do well, such as risk management, or loan underwriting.

Cohen cited the Apple Card, which is a Goldman-designed product delivered on Apple’s devices, as one such example. 

“That last capability is the consumer version of our platform strategy,” Cohen said. “It allows us to take products and services that we build for our own clients and then give it to other clients so that they can embed financial products into their ecosystem. This strategy will drive top-line growth, and it will create scale efficiencies.”

Goldman isn’t the only large bank that’s working with Big Tech companies. In November, Google announced a partnership with Citigroup to provide checking accounts to the tech firm’s customers. 

And yet, Goldman is probably doing it better than anyone because it has developed a suite of APIs that it can take off the shelf and plug into other platforms, according to Richard Crone, an independent consultant. 

“Goldman Sachs, when they write the history books, will be noted as the one who invented or perfected embedded banking, where you embed your financial services through the user interface, or at the edge, of someone else’s network,” Crone said. “If Goldman can get this right with Amazon, I would expect them to go to Facebook next or any other online platform of substance that provides them a large distribution channel.”

Goldman is leaning on many of the lessons it learned in its partnership with Apple, known as an incredibly demanding partner, Crone said. Most notably, the ability to offer instant issuance to a set of customers that have already been pre-validated, multi-factor authenticated, Know-Your-Customer credentialed by the large tech firms. 

“They already know the customer, but they have met the regulatory requirement in advance before they hand it over,” he said. 

The product will likely look similar to what small merchants are getting from Square Cash or PayPal Working Capital. 

Goldman has bigger ambitions. At last week’s investor day, the bank presented a slide that showed a product called Marcus Pay, which talked about point-of-sale solutions for merchants based on its digital consumer bank. 

This is just another example of how embedded banking is here to stay, which can be hard for a lot of bankers to understand because they want to service customers through their own app, Crone said.

But “no financial institution can reach the scale that’s required to compete electronically” with the large platforms if they only do it through their own app, he said.  

“If Goldman can pull off an embedded banking deal somewhere else besides Apple Pay, or if Citigroup can pull off Google Cache, that’s a leading indicator of a fundamental change in retail banking.”

See also: Goldman Sachs just unveiled hundreds of slides laying out the future of the company. Here are the 10 crucial slides that show how it plans to transform into a bank for everyone.

See also: Inside Goldman Sachs’ first investor day, where avocado toast and crab apples were served with tech talk, 3-year plans, and a surprising trading mea culpa

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US discussing Goldman Sachs 1MDB settlement of below US$2 billion

GOLDMAN Sachs Group Inc could end up paying less than US$2 billion (RM8.32 billion) to resolve US criminal and regulatory probes over its role in raising money for scandal-ridden Malaysian investment fund 1MDB, said three people familiar with the negotiations.

The Justice Department and other federal agencies, in internal discussions held in recent weeks, have weighed seeking penalties of between US$1.5 billion and US$2 billion, the people said. That’s less than what some analysts have signalled Goldman might have to pay. While a settlement could be announced as soon as next month, the terms could change before a deal is finalised, said the people who asked not to be named in discussing private negotiations.

The bulk of the penalties would be paid to the Justice Department. Attorney General William Barr has directly immersed himself in the case, according to another person familiar with the matter. Earlier this year, Barr obtained a waiver to let him oversee the investigation, even though his former law firm, Kirkland & Ellis LLP, is representing Goldman. It’s unclear whether the Justice Department is seeking a guilty plea from the bank.

A Justice Department spokesman declined to comment, as did spokesmen for the Federal Reserve and Securities and Exchange Commission, which have been pursuing civil investigations into Goldman. The bank reiterated its previous statements that it continues to cooperate with authorities.

Goldman Sachs shares climbed as much as 3.1 per cent on the discussions, the biggest intraday gain in almost two months. The bank’s stock is up 33 per cent this year.

Reputation blow

Goldman’s involvement with 1MDB has triggered one of the biggest blows to its reputation in recent years, leading to a litany of investigations and embarrassing revelations of a former banker bribing government officials. The Wall Street firm has been eager to move past the scandal, and a US settlement of below US$2 billion would put it on track to avoid the worst-case scenario that some analysts pegged at as much as US$9 billion in global fines.

Goldman is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much lower figures than their public stance of wanting to recover US$7.5 billion. Goldman is still privately seeking to reduce its sanctions, arguing that the crimes were committed by a rogue employee and that the bank wasn’t aware of the misconduct.

If it pays anywhere close to US$2 billion, Goldman would join other banks that have been subjected to massive US penalties this decade. In 2012, HSBC Holdings Plc set a new bar when it agreed to pay more than US$1.9 billion to settle allegations that it violated sanctions and enabled money laundering. BNP Paribas SA was then hit with the largest financial penalty ever in a US criminal case when it paid US$9 billion over sanctions violations.

In previous international corruption cases, the US has sometimes credited penalties paid to other countries for the same conduct. For example, a US$1.3 billion US settlement last year with Societe Generale SA included a credit of almost US$300 million that was paid to French authorities.

1MDB became the hub of a global corruption and embezzlement scandal in which a massive amount of cash was allegedly diverted to corrupt officials and financiers. Goldman helped the state investment fund raise cash, with the Wall Street bank making about US$600 million from US$6.5 billion in bond sales in 2012 and 2013.

Yacht, movies

Tim Leissner, a former senior Goldman banker in Southeast Asia, admitted last year to bribery and pleaded guilty to US charges that he conspired to launder money.

Money diverted from 1MDB was allegedly spent around the world, including on a super yacht, the Hollywood movie “The Wolf of Wall Street” and high-end real estate. Authorities in several countries have been working to recoup some of the missing billions and punish those involved.

There are signs that Goldman has made progress in its negotiations with US agencies and may also have a sense of how much it might pay to settle the investigations.

For instance, Goldman stopped buying back its stock in the third quarter as it began discussions with US authorities on 1MDB. Goldman later restarted its buybacks as talks with the government progressed and the firm added US$300 million to its estimate of possible legal losses, chief financial officer Stephen Scherr said on an October conference call with analysts and investors.

Compliance failures

Goldman has previously blamed Leissner for concealing his wrongdoing from the firm’s compliance efforts. Leissner has countered that the bank’s culture of secrecy led him to bypass compliance. US authorities allege that in addition to Leissner, two other bankers were aware of the scheme, including one who went on to become the bank’s top dealmaker in the region.

Earlier this year, the Fed banned Leissner and his former deputy, Roger Ng, from the banking industry. Ng faces US accusations of money laundering and bribery, and also Malaysian charges of aiding the bank’s efforts to mislead investors. – Bloomberg

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Against the Death Cult: We Must Not Let Ruthless Ideologues Destroy the Climate and Kill Us All

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Agriculture

The Niger delta is burning. The oil companies plumbing the river basin of its black gold have found an ingenious way of dealing with the natural gas they consider a waste by-product of the extraction process. Capturing the gas would be costly, inefficient – so instead, they flare it off. Across the delta, towers of flame burn day and night, some of them stretching ten storeys into the sky.

Gas flaring was officially banned in Nigeria in 1984 – but still, two million people live within four kilometres of a flare site, at risk of the cancers, neurological, reproductive and respiratory problems linked to the pollutants released into the air. The soil is hotter, and crop yields have dwindled; “You plant, and before you know it, everything is dead”. When the rains come, they are black. Oil spills spew from the pipelines of Shell and ENI, the biggest operators in the area. Shell has reported 17.5 million litres lost since 2011; Amnesty International say that’s likely a hefty underestimate. The spills have poisoned drinking water, and destroyed the livelihoods of the fishermen who once combed the delta. 

We are over the brink. People have already lost their lives to hurricanes and bush fires and flooding, to toxins and crop failures – all disasters rooted in fossil-fuel dependent extractive capitalism, bankrolled by a deregulated financial sector. People continue to lose their lives. Global temperatures soar, and a monstrous future slouches towards us from the ecocidal imaginations of the handful of humans directly invested in a doctrine of global annihilation. Now, the death drive built into the heart of our economy reveals itself in ever more undeniable terms; the skull is showing through the skin. 

Scientists at ExxonMobil confirmed the truth of climate change in the 1980s, at the very latest. Since then, Exxon and its fellow fossil fuel companies have spent decades sponsoring climate change denial and blocking efforts to legislate against apocalypse. Under their auspices, newspapers and broadcasters and politicians revelled in a vicious subterfuge disguised as pious gnosticism; asking how we can know for sure that climate change is caused by human activity. In recent years, this strategy has buckled under the weight of public outrage and scientific proof.

The science is clear: only an ambitious, rapid overhaul of the fundaments of our economy gives us hope of survival. And that hope is tantalisingly within our grasp. We have the technology, and we have the financial capacity; all that’s missing is the political will to give those solutions heft, muscle and cold hard cash.

Now, culprit companies are suddenly flouting their green credentials to shore up their position as custodians of the future. Shell Oil has made a big song and dance about its investments in green technology. Goldman Sachs has funded research into how to make cities “resilient to climate change”. These are little more than attempts to seduce and cajole worried publics and skittish investors. Still these companies hoard over-valued assets, continue ploughing resources into carbon-heavy industries, show no signs of leaving enough fossil fuels in the ground to avoid the breakdown of the climate, the potential collapse of civilisation and the extinction of life on earth. Negotiators were banned from mentioning climate change in recent UK-US trade talks. the UK government has subsidised the fossil fuel industry to the tune of 10bn in a decade, and its legislators continue to take its lobby money in return. They defend their right to starve out and flood and burn chunks of human existence – and make money doing it. 

We are being held hostage by a cabal of ruthless ideologues whose only loyalty is to a doctrine of global death. Their success thrives on silence, isolation, manipulation, denial. They are united in their opposition to reality, in their determination to hunt down or hound out real alternatives that threaten their mortal stranglehold on power. All other doctrines are heresy, and their preachers envoys of a sinister delusion. They are unique guardians of a dark and dazzling reality.

If this took place among a handful of hippies beckoning oblivion from the heat haze of a california desert we would call it is: a death cult. Instead, it is orchestrated from sumptuous glass towers, from the velvet inner chambers of parliament – so we call it business as usual. 

To these science-backed suggestions that economic alternatives are possible – even urgent, necessary, beautiful – they react with vitriol and incredulity. Saving the world may sound appealing, but it clashes intolerably with the cultish diktat: ‘There Is No Alternative”. Partisans of the Green New Deal like Alexandra Ocasio Cortez are dismissed at best as well-meaning dreamers or childish hysterics, and, at worst, nightmarish envoys of backdoor totalitarianism. Indeed, grassroots activists have been murdered for organising against big polluters. The political allegiances are clear: Defending life is foolish. Annihilation is inevitable. We have only to accept it graciously, to walk into its arms.

Rightwing politicians barter casually about the difference between a decarbonisation target of 2030, 2045, 2050, 2060 as a matter of messaging and electoral success. As though that difference were not cashed out in millions of deaths. Such differences slide off the sunny, addled mind of the cultist, for whom life and death are indistinguishable. 

A chosen few will be spared; the golden ones who walk in the light. As the asset-stripping and plundering continues apace, so the market for luxury disaster insurance packages has grown, with companies offering high-tech flood defences, private firefighters, private security to guard against mobs of looters. Theirs is a gilded world where disaster can never truly happen to them – because it never truly has. That no insurance policy in the world will provide them with breathable air or sustainable agriculture is a matter for the others, the ghosts, the un-living, those whose existence never really registered. Us.   

Broadcasters tried to haul Boris Johnson before the court of the living on Thursday night for the climate change debate, to account for Conservative policy proposals which present a 50% risk of tipping the world into irreversible, runaway climate breakdown, to account for his fossil fuel backers. He responded by threatening them with censure and legal action. Cult leaders can tolerate no scrutiny of their fragile world picture, no challenge to their power. 

We can break the stranglehold, and commit the death cultists to the bleak annals of history where they belong. It is time to choose only those who have chosen life.   

Eleanor Penny is a writer and a regular contributor to Novara Media. 

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Apple Card faces probe over discrimination complaint | ABS-CBN News

cell phone person

Something curious happened when a husband and wife recently compared their Apple Card spending limits.

David Heinemeier Hansson vented on Twitter that even though his spouse, Jamie Hansson, had a better credit score and other factors in her favor, her application for a credit line increase had been denied.

The prominent software developer wondered how his credit line could be 20 times higher, referring to Apple Card as a “sexist program” (with an expletive added for emphasis).

The card, a partnership between Apple and Goldman Sachs, made its debut in the United States in August.

“My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time,” he wrote Thursday on Twitter. “Yet Apple’s black box algorithm thinks I deserve 20x the credit limit she does.”

Hansson’s tweets caught the attention of more than just his 350,000 followers.

They struck a nerve with New York state regulators, who announced Saturday that they would investigate the algorithm used by Apple Card to determine the creditworthiness of applicants.

Algorithms are codes or a set of instructions used by computers, search engines and smartphone applications to perform tasks, from ordering food delivery to hailing a ride — and yes, applying for credit.

The criteria used by the Apple Card are now being scrutinized by the New York State Department of Financial Services.

“Any algorithm that intentionally or not results in discriminatory treatment of women or any other protected class violates New York law,” an agency spokeswoman said in a statement Saturday night.

“DFS is troubled to learn of potential discriminatory treatment in regards to credit limit decisions reportedly made by an algorithm of Apple Card, issued by Goldman Sachs, and the Department will be conducting an investigation to determine whether New York law was violated and ensure all consumers are treated equally regardless of sex,” the statement said.

An Apple spokeswoman directed questions to a Goldman Sachs spokesman, Andrew Williams, who said that the company could not comment publicly on individual customers.

“Our credit decisions are based on a customer’s creditworthiness and not on factors like gender, race, age, sexual orientation or any other basis prohibited by law,” Williams said.

David Hansson did not respond to an interview request Saturday night.

His wife’s experience with the Apple Card, the first credit card offering by Goldman Sachs, does not appear to be an isolated case, however.

Steve Wozniak, who invented the Apple-1 computer with Steve Jobs and was a founder of the tech giant, responded to Hansson’s tweet with a similar account.

“The same thing happened to us,” Wozniak wrote. “I got 10x the credit limit. We have no separate bank or credit card accounts or any separate assets. Hard to get to a human for a correction though. It’s big tech in 2019.”

In addition to Goldman Sachs, Apple partnered with Mastercard on the Apple Card, which the companies hailed as a revolutionary “digital first” credit card that had no numbers and could be added to the Wallet app on the iPhone and used with Apple Pay.

A spokesman for Mastercard, which provides support for Apple Card’s global payments network, did not respond to a request for comment Saturday.

David Hansson, a Danish entrepreneur and California resident, is known for creating Ruby on Rails, a popular computer coding language used to create database-backed web applications. He is an author and decorated race car driver on the Le Mans circuit, according to a biography on his website.

In a subsequent tweet, he said that the Apple Card’s customer service representatives told his wife that they were not authorized to discuss the credit assessment process.

He said that customer service employees were unable to explain why the algorithm had designated her to be less creditworthy but had assured his wife that the bank was not discriminating against women.

An applicant’s credit score and income level are used by Goldman Sachs to determine creditworthiness, according to a support page for the Apple Card. Past due accounts, a checking account closed by a bank for overdrafts, liens and medical debts can negatively affect applications, the page stated.

On Friday, a day after David Hansson started railing on the Apple Card’s treatment of female credit applicants, he said his wife got a “VIP bump” to match his credit limit. He said that didn’t make up for the flawed algorithm used by Apple Card.

He said many women had shared similar experiences with him on Twitter and urged regulators to contact them.

“My thread is full of accounts from women who’ve been declared to be worse credit risks than their husbands, despite higher credit scores or incomes,” he said.

2019 The New York Times Company

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