The IOUs are racking up (Michael Short/Getty Images)
Charging the iPhone to my Apple Card... seamless. Paying it off on time: not so much. Goldman Sachs’ Apple Card biz has a bad-credit problem, according to competitor JPMorgan. In 2019 the investment-banking giant triumphed over established card companies to become Apple's card issuer. The sleek no-fee card generated hype, with early users posting pics of their names etched in Apple titanium. Some expressed shock they'd been approved. Now we know why:
DJ D-Sol in the hot seat... Goldman CEO David Solomon, who moonlights as an EDM DJ, is under pressure to produce profits at Goldman's consumer-facing biz (which makes up 18% of its total revenue). The Wall Street-centric bank expanded to consumers in 2016 with its high-yield Marcus savings account. Then Apple Card supercharged its retail reach. Now:
Cracks emerge in a downturn… and they could cause a quake. With inflation at a 40-year high and unemployment ticking up, the weakest American borrowers are starting to miss loan payments. Goldman execs have acknowledged that its consumer biz could lose even more than $1.2B if a deep recession forces them to set aside more $$ for defaulted loans. Banks with more subprime exposure will feel the hit first.