Goldman Sachs has reportedly been recruiting small businesses to advocate for its own interests.
According to a recent from Reuters, the bank connected small business owners with members of Congress who may have influence surrounding financial regulations. The goal is to convince these lawmakers that a new proposal to raise capital requirements for big banks would ultimately harm small businesses.
The proposal, which is known widely as Basel III Endgame, is a joint proposal by the Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency. The change would rewrite capital obligations for all banks with at least $100 billion in assets, largely requiring increases in aggregate capital levels.
On its surface, the proposal would only impact large banks – not small businesses. But many in the banking industry argue that the regulatory burden would force lenders to shut down certain offerings or increase costs for business customers.
To fight the proposal, Goldman Sachs recruited dozens of small business owners, often connecting through the company’s philanthropic 10,000 Small Businesses program. These business owners received travel assistance and talking points to make their points clear to members of Congress. The ultimate goal is reportedly to get these representatives to sign a letter asking the Fed to reconsider the change.
It’s certainly possible that this new regulation could negatively impact small businesses. However, the rule would only apply to banks with more than $100 billion in assets. And the Small Business Administration reports that only about 40 percent of small business loans come from such institutions. Additionally, the SBA reports that small business loans account for only around 3.3% of the total assets of banks with $50 billion or more in assets.
Programs like 10,000 Small Businesses can certainly help the small business community. The initiative has supported members through advocacy in other areas as well. But it’s also important for businesses to carefully research and consider what they’re signing up for, as large banks and corporations may have their own motives for creating these programs as well.
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