RESPONSE OF GOLDMAN SACHS BANK USA TO

COMMENT LETTERS SUBMITTED BY

THE INNER CITY PRESS'S FAIR FINANCE WATCH
SEPTEMBER 17,2015
Goldman Sachs Bank USA ("GS Bank") hereby submits its response to the three
comment letters, submitted on September 2, September 3 and September 9, 2015 (the "Comment
Letters"), by the Inner City Press's Fair Finance Watch ("FFW"). The Comment Letters relate to
the application (the "Application"), dated August 19, 2015, by GS Bank, a New York statechartered member bank, to the Board of Governors of the Federal Reserve System (the "Board")
for prior approval to acquire by purchase and assumption certain deposit liabilities and certain
very limited non-financial assets of GE Capital Bank, a Utah state-chartered non-member
industrial bank, pursuant to the Bank Merger Act, 12 U.S.C. 1828(c) (the "Bank Merger Act").
Although GS Bank believes most of the issues raised in the Comment Letters are
outside the scope of the statutory factors set forth for Board consideration under the Bank
Merger Act, GS Bank believes it is important to note the multiple inaccuracies in the Comment
Letters. GS Bank also believes that FFW does not satisfy the criteria established by the Board
for an extension of the comment period and a public hearing.

1.

Issues Raised
A.

Scope of redactions

GS Bank has provided a new public redacted version of the Application

disclosing additional information, including certain terms of the transaction that
were not already made public, the number of employees in Utah, the contact
persons for the Application, the names of the confidential exhibits and more.
Regarding the remaining confidential redacted information, GS Bank has
requested confidential treatment pursuant to the Freedom of Information Act,
5 U.S.C. 552, and the regulations promulgated by the Board pursuant thereto, 12
C.P.R. Part 261. The redacted information includes nonpublic commercial or
financial information that GS Bank believes is privileged or confidential within
the meaning of Section 261.14(a)(4) of the Board's regulations or that is
_otherwise exempt from disclosure under Section 261.14(a) of the Board's
r~ulations. The redacted information has not been, and is not required to be,
publicly disclosed. The redacted information includes nonpublic information
about both parties to the transaction, the disclosure of which would reveal to their
competitors their internal strategies, transactions and competitive positions and
would place each party to the transaction at a competitive disadvantage with
respect to its competitors who do not publicly reveal such information.

B.

No public comment period or Community Reinvestment Act ("CRA")

review when The Goldman Sachs Group, Inc. ("Goldman Sachs")
became a bank holding company

FFW asserts that there was no public comment period or CRA review
when Goldman Sachs became a bank holding company in September 2008. FFW

has previously asserted this in its comment letter in connection with the filings,
dated September 15, 2009, by Goldman Sachs to the Board to retain its interests
in (1) Atlantic Capital Bancshares, Inc., Atlanta, Georgia; (2) Avenue Financial
Holdings, Inc., Nashville, Tennessee; (3) Doral Holdings, L.P., San Juan, Puerto
Rico; and (4) The First Marblehead Corporation, Boston, Massachusetts, pursuant
to Sections 3 and 4 of the Bank Holding Company Act of 1956, as amended (the
"BHC Act"), and the Board's Regulation Y (the "2009 Applications"). In its
Order, effective March 11, 2011, approving Goldman Sachs' application pursuant
to Section 3 of the BHC Act to retain 9.8% ofthe outstanding common stock of
A venue Financial Holdings, Inc. (the "Avenue Financial Order"), the Board
mentioned that "a commenter noted that the Board waived public notice of
Goldman [Sachs'] application to become a bank holding company in September
2008," further stating that the Board "determined that emergency conditions
existed that justified the Board's expeditious action" on its application. 1 Although
the regulations of the Board allow the Board to "take into consideration the
substance of comments with respect to an application,"2 the Board's Regulation Y
states that a comment is not considered substantive if it raises previously
considered claims or irrelevant issues. 3 Therefore, GS Bank submits that these
comments are not substantive (as such term is used in Regulation Y) because they
were previously asserted and taken into consideration by the Board.
Additionally, in its last two CRA Public Evaluations from the Federal
Reserve Bank ofNew York, dated November 5, 2012 and September 13,2010,
GS Bank received CRA ratings of"Outstanding." Based on publicly reported
CRA exam results, only approximately 8.5% of banks examined in 2012 and
9.1% of banks examined in 2010 received a rating of"Outstanding". 4 Therefore,
GS Bank submits that it has undergone a thorough CRA review since it became a
bank holding company in September 2008.

C.

Accusations of "predatory practices" in the mortgage field and

municipal finance

FFW makes accusations of"predatory practices" in the "mortgage field"

and "municipal finance," and states that there are a number of compliance
settlements that must be reviewed in connection with the Application. FFW has
, previously asserted claims of predatory lending in its comment letter in
'cpnnection with the 2009 Applications which were approved by the Board. GS
B'ank submits that such comments are not substantiated by specific arguments or

See The Goldman Sachs Group, Inc., 97 Fed. Res. Bull. 22 (June 2011), n. 3 and 5 (citing The Goldman
Sachs Group, Inc., 94 Fed. Res. Bull. C I 0 I (September 2008)).
2

12 C.F.R. 262.3(e).
See 12 C.F.R. 225.16(c)(3).

See Federal Financial Institutions Examination Council Interagency CRA Rating Search (available at
http://www.ffiec.gov/craratings/default.aspx).

facts, and believes these issues are outside the scope of the statutory factors for
Board consideration under the Bank Merger Act.

D.

Carmen Segara Matter

FFW states that the audio released by examiner Ms. Carmen Segara
requires an extension of the comment period and a public hearing. FFW does not
provide, however, any basis for this assertion, which has been in the press since
September 26, 2014, and GS Bank believes the issue is outside the scope ofthe
statutory factors for Board consideration under the Bank Merger Act.

E.

List of news articles about Goldman Sachs' lawsuits, settlements, and

other events

FFW references several articles related to lawsuits, settlements and other

events, all but one of which involve Goldman Sachs but not GS Bank. GS Bank
respectfully submits that such comments are not substantiated by specific
arguments or facts. GS Bank notes that none of the articles relate to GS Bank
itself, and believes these issues are outside the scope of the statutory factors for
Board consideration under the Bank Merger Act.

F.

Goldman Sachs' CRA Program

FFW asserts that "Goldman Sachs' current, limited CRA program would
not be sufficient for what it seeks to do in this proposal." GS Bank believes that
its CRA program, rating and record satisfy applicable requirements under the
CRA. GS Bank's compliance with CRA requirements is also addressed in the
public version ofthe Application.

2.

Reguest to Extend the Comment Period

The Board generally provides at least 30 days for members of the public to
comment on applications submitted under the Bank Merger Act and the Board may, in its
discretion, extend the public comment period. 5 However, GS Bank believes that FFW, which is
an experienced commenter on applications to the Board, has not raised any substantive issues in
need of further comment and that FFW's comments are not substantiated by specific arguments
or facts.
'
\
3.
Reguest for Public Hearing
The Comment Letters request a public hearing based on the above allegations.
However, GS Bank respectfully submits that FFW's allegations do not rise to the level of
meriting a public hearing. The Board's Rules of Procedure provide for the possibility of
informal public hearings or meetings on applications. 6 Persons commenting on an application
5

See 12 C.F.R. 225.16(c) and262.3(e).

See 12 C.F.R. 262.3(e).

(including FFW) often request a public hearing and the Board will deny such requests, absent
compelling circumstances of a type not raised here by FFW. As the Board has stressed, a
hearing is unnecessary when, as in the case of this Application, the requesting party has already
had the opportunity to submit written comments; the requesting party fails to identify any
genuine dispute about facts that would be material to the Board's decision; and a public hearing
is not necessary to clarify the factual record of the proposal.
We believe that FFW has not met these regulatory standards here. Specifically,
there is no genuine factual dispute; there has been no showing that the written comment
approach is insufficient; and there has been no showing why a hearing will elicit any material
information that could not be provided in written comments.

In closing, GS Bank respectfully requests that the Board deny FFW' s requests for
an extension of the comment period and a public hearing. Furthermore, GS Bank believes that
FFW's Comment Letters should not affect the Board's decision on the Application.