Goldman Sachs is lending to subprime borrowers to get an early warning about the next economic crash


You might remember that Goldman Sachs is lending to subprime borrowers. Turns out it’s all a part of a plan to help predict the next credit cycle.

In February, Goldman Sachs surprised Wall Street when it said that more than 80% of borrowers for its Marcus consumer lending product had a FICO score of more than 660 at year-end. The implication was that nearly 20% had a FICO score of less than 660, placing them in a group often referred to as subprime.

Wall Street analysts were perplexed. In April, Autonomous Research’s Guy Moszkowski asked for an explanation, saying several of his clients were surprised by the scale of subprime lending at Marcus.

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