Goldman Sachs is expanding into a new business frontier: traditional banking. Goldman is building an in-house private bank that will lend out money to rich people and corporations, the Wall Street Journal reports, with plans to jack its private loan business from $12 billion to $100 billion. Part of the reason: Its more thrilling revenue streams, like trading and investment banking, are reeling. Goldman reported an ugly quarter today, with income down 11%, the AP reports—though it still managed to handily beat analyst expectations.
The government forced Goldman to convert itself to a bank-holding company during the financial crisis, and now Goldman aims to make the best of it. Building the business will also give Goldman access to deposits, lowering its reliance on leverage. We "backed into a big opportunity," Lloyd Blankfein says. "We have the regulations. We have the costs. … It's a no-brainer." Still, Blankfein hasn't caught banking fever—he has no plans to open branches, issue credit cards, or "give away toasters."