Is Goldman Covered by the Community Reinvestment Act?

Sanford Bernstein's Brad Hintz knows much more about banking than I do. And he seems to have discovered a CRA loophole, at least insofar as the Community Reinvestment Act applies to Goldman Sachs:

Mr Hintz, who predicts a change in Goldman's model, understands that the brand remains sacrosanct and so he doubts the firm will acquire a conventional bank. "If you acquire a bank, you've got Community Reinvestment Act requirements," he says, referring to US banking rules that require banks to lend in all segments of their communities. "It's hard for me to believe that Goldman executives are going to be out calling on Korean bodegas."

It seems that, at least according to Mr Hintz, Goldman still isn't covered by the CRA -- even though it is now a commercial bank. What's more, Goldman can avoid ever being covered by the CRA, so long as it doesn't acquire a conventional bank. (For some reason, Goldman Sachs Bank USA, in Salt Lake City, doesn't seem to count.)

As for the CRA requirements, there's a universally-accepted way of getting around them without directly lending to Korean bodegas: you just put money on deposit at credit unions which do lend to Korean bodegas. My credit union, for one, would love to take a large deposit from Goldman Sachs, and would put it to good use lending to low-income borrowers in Goldman's own local community of downtown Manhattan.

But now it seems that maybe Goldman isn't covered by the CRA after all. And, of course, even if it is covered by the CRA, it can happily ignore that so long as its regulator, New York State, is willing to overlook the fact. It'll be interesting to see when, whether, and how Goldman clears this issue up.

(HT: Richards)

Update: I just heard from Goldman, and they don't know what Hintz is talking about either. Yes, now that Goldman is a bank holding company, it is already governed by the CRA, and they're in the process of putting the legal infrastructure together and hiring a CRA officer.