The last time former Goldman employee and then Treasury Secretary Hank Paulson bailed out the hedge fund known as Goldman Sachs, and its closest peers (but not its biggest fixed income competitor Lehman Brothers of course), even the traditionally confused American public pushed back on the structure of the bailout which converted the Goldman holding company into an FDIC-insured company, which led many to ask: just where are Goldman's deposits?

The answer, of course, was nowhere, so perhaps in anticipation of the logical pushback against its second, upcoming bailout which would see the taxpayer-backed depositor insurance company once again provide trillions in cash to banks as well as the glorified hedge funds such as Goldman, the firm moments ago decided to do something it has never done before: become an actual bank with checking accounts and such.

It did so by announcing moments ago it would acquire GE's Capital Bank's online deposit platform, as in online checking accounts, including $8 billion in deposits and $8 billion in brokered CDs, thereby providing Goldman with a virtually costless source of $16 billion in funds. Costless, because under ZIRP, Goldman pays precisely zero interest for the unsecured liability also known as a deposit.

from the PR:

Goldman Sachs Bank USA (“GS Bank”) announced today it has entered into an agreement with GE Capital Bank (“GECB”) to acquire GECB’s online deposit platform and assume GECB’s approximately $8 billion in online deposit accounts and $8 billion in brokered certificates of deposit for an expected total of approximately $16 billion of deposits at closing. GS Bank will acquire no financial assets in the transaction other than cash associated with the deposit liabilities. “This transaction achieves greater funding diversification and strengthens the liquidity profile of GS Bank by providing an additional deposit gathering channel. The establishment of this channel represents the advancement of a key funding objective for the firm,” said Liz Beshel Robinson, Treasurer of The Goldman Sachs Group, Inc. Scott Roberts, President of GECB, said: “We are pleased to transition our depositor relationships to GS Bank, a large, stable institution with a focus on customer service. I am personally excited at the prospect of joining GS Bank, along with my team, to work towards a seamless transition of depositor accounts and to assist in managing the platform going forward.” “We look forward to welcoming and serving GECB’s online deposit customers at GS Bank with the high standard of service they have come to expect. We also look forward to working with our new colleagues from GECB,” said Esta Stecher, Chief Executive Officer of GS Bank. As part of the transaction, GS Bank will extend offers of employment to substantially all of GECB’s employees dedicated to supporting the online deposit platform. As GECB’s deposit platform is online only, the transaction does not include the purchase of any physical assets.

Of course, when the next systemic crash does come, anyone holding more than the FDIC insured maximum will be promptly bailed-in alongside all other unsecured creditors, which is why we doubt Goldman will have much success in gathering zero-cost depositor capital despite the bank's desire for "greater funding diversification" (one may wonder why Goldman needs said diversification now... rhetorically).

Or perhaps we are wrong: just look at Greece - instead of taking every opportunity to empty out the local banks, the domestic savers who clearly have no idea that all the Greek government has done is to buy a few months of time, are once again eager to put their money in the same banks which just a few weeks ago refused to give money to its rightful owners.

Maybe Goldman is merely betting that when it comes to human stupidity, it truly is infinite. In which case, it probably made the right decision. Otherwise, well, step aside Spiderman Towel...

... it's time for the Blankfein Towel.