How did Goldman-Sachs qualify for Bank Bailouts even if it isn’t a bank?

In order to qualify for the Troubled Asset Relief Program (TARP), the entity must be a financial institution. Under the definition of financial institution, companies that can be considered to be banks may qualify, but the definition is much broader than this. A financial institution is not just a bank, which is how the firm, Goldman-Sachs, met the criteria for a TARP bank bailout.

Goldman-Sachs is an investment bank that manages securities. Securities are either debt securities such as bonds or they are equity securities such as stocks. They also offer other services in the financial sectors such as for acquisitions and mergers. They are a firm that conducts asset management services for their clients. They also were in the business of analyzing the data that loan applicants give in order to determine the applicant’s creditworthiness.

Under the definition of financial institution, the firm must be a United States regulated investment firm, which is exactly what Goldman-Sachs is. It was also considered to be one of the financial institutions that were “too big to fail.” The concept that a company is too large to allow to be defeated was one of the reasons that certain financial institutions were chosen to receive TARP funds. TARP was invented as a way to help stimulate the economy, which is why the government did not want to see large corporations fall under.

Goldman-Sachs is a company that had a global presence. In 2006, the number of their employees reached as high as 31,701 people around the world. The concern was that if Goldman-Sachs was allowed to fail, the jobs of 31,701 people would be in jeopardy and then lost. It is also a company that has headquarters located all over the world. Along with their American headquarters in New York, Goldman-Sachs also has headquarters in London and Hong Kong. They have branches in other countries around the world such as in Japan and India. Their other major office within the United States is located in Salt Lake City, Utah. With such a large presence around the world, this financial institution met the criteria for being too big to fail.

The financial institutions that qualify for TARP funds also must have troubled assets that include securities based in an industry that is contributing to the economy’s instability. As Goldman-Sachs is a firm that invested some of its funds in mortgage-backed securities, it met the criteria to qualify for TARP funds. The sub-prime mortgage industry was a big part of the reason that the economy began to deflate; this is what happened when the housing bubble burst. For this reason, the government purchased Goldman-Sachs’ troubled mortgage-related assets in exchange for the ability to purchase its stock at a low, fixed rate.