Goldman Sachs Faces Huge Losses from Credit-Card Blunders 💳💥 | Why Did They Enter This Market? 🤔

hi this is the big insight and today we will be discussing Goldman sack's big credit card problem the firm is facing mounting losses as it tries to exit the credit card business revealing a $400 million pre-tax hit this loss is part of Goldman's larger struggle to offload its Main Street lending business the bank CEO David Solomon cited lacks underwriting standards as a key issue Goldman Sachs entered the credit card Market through Partnerships with General Motors and apple to leverage its brand and Technology however problems emerged as high charge off rates operational difficulties plagu its Consumer Credit programs a charge off occurs when a lender deems a debt as unlikely to be collected and writes it off as a loss in the context of credit cards High charge off rates mean that a significant portion of the credit card balances is considered uncollectible and is therefore written off by the bank The Lax underwriting aimed at attracting a broader customer base has backfired on them Goldman is now looking at options to sell off their consumer products but even those that are interested or skeptical the bank is in talks to sell their GM credit card business to Barkley's a British multinational bank is reluctant to pay the expected price due to the high charge off rates and are skeptical to assume that risk the GM credit card program which allows card holders to earn points for car payments and servicing has been problematic since Goldman took over from Capital 1 and began opening new accounts in 2022 Goldman's new accounts have high charge off rates averaging over 10% compared to the US commercial Banks average of about 4.5% in the second quarter of the year the biggest challenge ahead is offloading at 17 billion credit card partnership with apple apple has proposed an exit from this contract within 12 to 15 months which includes both the credit card and a recently launched savings account Goldman is likely to face a significant loss on this deal as well like Goldman had high hopes for its credit card Venture which was part of a strategy to diversify its revenue streams and stabilize its financial performance after the 2008 financial crisis by venturing into Consumer Finance Goldman aimed to reduce its Reliance on the volatile Investment Banking sector and tap into the steady income from interest and fees as Goldman Sachs continues to deal with these setbacks including the potential loss from its partnership with apple the bank's missteps in Consumer Finance remain a significant concern Goldman sacks have been down for 4.04% this past month if you enjoy this type of content please like comment and subscribe thank you