sticky inflation is likely to remain a tough problem for small and regional banks according to david solomon ceo of goldman sachs which thinks it can rely on economies of scale to ease its entry into the consumer end of the business after a rocky start solomon told an audience at the forbes iconoclast summit 2023 that he is not hopeful that ballooning inflation will be quickly contained despite a series of interest increases that have brought the federal reserve’s target for overnight rates to 5525 up from essentially zero for most of 2020 as the central bank loosened monetary policy to combat the economic effects of the covid19 pandemic “i have a sense that inflation is going to be stickier than the current market expectation” solomon said “we’re watching the data like everyone else but i think its an uncertain time and a time to be cautious because we’re having such dramatic change in monetary policy after a very disruptive period of pandemic fiscal policy” big banks are in good shape to withstand the rapid rise in interest rates but their smaller competitors have less flexibility he said “regional banking and local community banks are important for the ecosystem capital formation of smalltomedium sized enterprises but at the same point scale is necessary for efficiency” solomon said “when you tighten interest rates by 500 basis points very quickly there are going to be points where things break and confidence is broken” a regional bank crisis was kicked off earlier this year with the failures of silicon valley bank and signature bank along with the announced closure of silvergate bank the banks had been significant lenders to the cryptocurrency sector and technology companies and they had not reckoned with rising interest rates making their bond investments less valuable leading to assetliabilities mismatches the fed is expected to pause rate hikes at its june 14 meeting but that is not a foregone conclusion solomon said that 25 years ago there were 30000 banks in the united states today there are slightly more than 4000 he said he believes there needs to be more consolidation among midsized regional banks especially in the face of increasing regulatory costs and the necessity for technology investments goldman is expanding into the banking business from its wall street base since 2020 the investment bank incurred 3 billion in losses at its platform solutions branch which includes consumer lending and its transaction banking business in addition to a card partnership with general motors  goldman sachs underpins many of tech giant apple’s consumerbanking products including its credit card and highyield savings account solomon has said the latter is a tool to diversify funding sources by bringing in more deposits the account drew nearly 1 billion of deposits in its first four days “it’s very important for diversifying our funding but directtoconsumer was harder than we thought” solomon said “we’ve narrowed it down we have two partnerships on the credit card platform that we continue to execute on i don’t think we had any belief that it would be profitable in the first five years”