REVIEW: Apple's new AirPods are a mixed bag

• Steve Kovach
 

• 8h
• 14,148
 
• 7
 

Hollis Johnson/Business Insider

Nothing pairs better with a controversial move like killing the headphone jack from the most popular consumer product in history than releasing an equally controversial accessory to go along with it.

Since Apple announced its new wireless AirPods, they’ve become sources of both optimism and skepticism. A photo of my friend Scott Stein from CNET wearing the AirPods quickly went viral on Reddit and served as a focal point of anger from Apple fans. Did Apple really make wireless headphones that look like that?

Others have been more optimistic, pointing to the built-in intelligence and benefits of having Siri buzzing in your ear at all times.

I’ve been using the $159 AirPods since Apple announced them last Wednesday, and they certainly are a mixed bag. They fit nicely in my ears, they sound fine, and Apple finally solved the annoying Bluetooth pairing process. I also enjoyed having a new way to communicate with Siri.

At the same time, a lot about the AirPods make it apparent that this is a version one product, especially when it comes to controlling your music. And that design is likely to remain controversial. Overall though, the AirPods are another example that Apple is laying the groundwork for a future without wires and new methods of interacting with our gadgets. That’s more than enough to make the concept exciting.

The AirPods go on sale in October, and the version I’ve been testing is a pre-production unit. So read everything in this review with the caveat that things could get better before launch.

What are AirPods?

The AirPods look nearly identical to Apple’s wired EarPods, except with the wires snipped off at the bottom. Each AirPod has a built-in microphone for phone calls and talking to Siri, and they’re packed with extra technology like infrared sensors that can detect when they’re in your ear and an accelerometer that can detect when you tap each AirPod. (More on that later.)

They connect to your iPhone via Bluetooth, and will also work with any other standard Bluetooth audio device. AirPods come with a magnetic charging case that has its own battery for charging your headphones while out and about. I have a full guide on how the AirPods workright here.

Pairing and listening

Think of AirPods as standard Bluetooth headphones with some extra intelligence built into them. Each AirPod has a new W1 processing chip inside that acts as the “brains” of the headphones. The W1 helps manage battery usage, tells your iPhone when the AirPods are in your ears, and makes it super easy to pair to your iPhone, Apple Watch, and Mac.

The pairing is one of the best features. Instead of poking through settings and waiting for your headphones to appear in your Bluetooth menu, all you do is flip open the AirPods’ charging case when it’s close to your iPhone. A little window pops up that prompts you to pair — and boom. You’re all set. Also, after pairing with your iPhone, the AirPods will automatically pair with your Mac and Apple Watch if they’re running the new macOS Sierra and watchOS 3 software updates, respectively.

That may seem like a tiny detail, but if you’ve ever had trouble pairing a Bluetooth accessory to your iPhone, you know how valuable it is that Apple solved that problem.

Hollis Johnson/Business Insider

The W1 chip also makes sure music doesn’t play through the AirPods until you put them in your ears, thanks to the infrared sensors in each one. For example, if you’re listening to music from your iPhone’s speakers and then pop in the AirPods, the music will automatically transfer to your AirPods. Since each AirPod pairs individually with the iPhone, you can even use one at a time if you want.

Put that all together, and you have a suite of impressive features. AirPods are more than a simple pair of wireless headphones pumping audio into your head. They’re constantly working in the background to enhance the listening experience.

As for sound quality: I’m no audiophile, but to me, the AirPods sound nearly identical to Apple’s wired EarPods. That’s obviously good enough for millions of people — EarPods have been their headphones of choice for years — but I expected more out of a $159 pair of headphones. There’s a low bar for audio quality with a free pair of headphones, but I was hoping for a boost if I’m going to pay a premium for the AirPods.

Battery life is great though. Apple says you get up to five hours of listening time, plus up to 24 if you charge them up with the battery included in the carrying case. I think that’s more than enough. I never felt like I was at risk of running out of batteries. Just make sure you bring the case with you wherever you go.

Questionable controls

Unlike Apple’s wired EarPods, there’s no dongle for controlling your music, answering calls, or adjusting the volume. That means you have to do everything through Siri or directly on your phone. It’s easily the biggest drawback to the AirPods, and it will likely be a deal breaker for many unless Apple comes up with a software fix between now and launch.

Let’s take volume control, for example. If you’re listening to music and want to turn up the volume, you have to double tap one of the AirPods. That activates Siri, which in turn pauses your music (ugh!) so you can say “raise the volume.” Then the music resumes with the volume turned up. Compare that to simply tapping on the volume button on the wired EarPods, and you can imagine how annoying the process is.

Of course, you can still adjust the volume or switch tracks by pulling out your phone or using your Apple Watch, but the fact that there’s no seamless way to perform those actions from the headphones seems like a major oversight to me. I would’ve liked to see more tapping gestures added to the AirPods so users don’t have to interrupt their music to make adjustments.

Hollis Johnson/Business Insider

I also had difficulty controlling Spotify. While Apple Music gives you full Siri control, from changing tracks to telling it exactly which song you want to listen to, I couldn’t even get Siri to reliably pause tracks in Spotify while using the AirPods. Meanwhile, I’ve never had a problem controlling Spotify with my wired EarPods. (Again, these issues could be resolved before the AirPods launch.)

Luckily, you can change the AirPod settings so a double tap enables play/pause for your music instead of launching Siri. It’s not an ideal fix, and it still doesn’t address the volume control issue, but it helps a little.

Overall, it seems like Apple missed a major opportunity to improve controls while using the AirPods, or at least keep things on par to using the dongle on the wired EarPods.

Siri

If you want a taste of the future, try using Siri with the new AirPods.

AirPods are the first time you’re able to use Siri without being tethered to your iPhone, and the implications for that are huge as Apple’s digital assistant continues to evolve and become smarter. Amazon proved with the Echo that there’s a big opportunity to develop a computing platform controlled entirely with your voice.

The only problem with that: Echo is stuck in your living room. Siri and the AirPods are with you wherever you go.

By double tapping one of the AirPods, you can activate Siri and use it just as you normally would. Although Siri still isn’t as robust as some other assistants, I was still able to do a lot with just my voice. Checking and sending text messages. Getting weather and sports alerts. Making a phone call. Siri is already at the point where you can do almost everything you want to do without looking at your phone, and the AirPods make using those features seamless.

Consider this the first step towards a future where we no longer have to stare at a screen to get things done. Siri (or any other digital assistant) can always be there, responding to your queries by buzzing in your ear, almost like in the movie “Her.” That alone makes the AirPods an incredibly intriguing product despite the other issues.

Design

Out of the ear, the AirPods look just fine. They’re nearly identical to the EarPods, minus all the annoying wires. The design has become so ubiquitous over the years that it’s barely noticeable, so I figured that’d be the same case with the AirPods.

Until I put them on.

How do I look? Hollis Johnson/Business Insider

While the AirPods feel perfectly comfortable, they look kind of goofy, like you’re wearing white plastic earrings or a slimmer version of those Bluetooth headsets everyone had 10 years ago. I got a few snickers wearing them around the office, and felt a bit self conscious wearing them in front of dozens of strangers on a recent flight. No wonder Scott’s photo went viral last week. The AirPods literally stick out like a sore thumb.

Still, the AirPods stayed in my ears well. I never felt like they’d slip out, even while walking around or working out at the gym. And not having to wrestle with wires that tangle easily is a huge advantage. They may look a little funky, but at least they’re functional.

Just be careful. The AirPods are tiny and likely to get lost if you’re not careful. My best advice is to put them right back in the charging case as soon as you’re finished with them.

Skye Gould/Business Insider

Conclusion

There’s a lot to like about the AirPods. The intelligent pairing and processing power of the W1 chip solve a lot of problems I didn’t even realize wireless headphones had until now. And using Siri without feeling tethered to my iPhone is a delight.

However, the lack of audio controls and the awkward design are two major drawbacks for me. Hopefully Apple can develop some new controls before or shortly after the AirPods go on sale. Otherwise, I think it's going to turn off a lot of people. And while it’s too late to do anything about the design, the AirPods are at least comfortable and you don’t have to worry about them falling out.

$159 is a big ask on top of a new $649 iPhone, and I was hoping the AirPods would do a little more for that price. They may not be the best wireless headphones you can buy, but I do think they’ll push the category forward more than any other attempt so far.

SEE ALSO: What it's like using the AirPods

NOW WATCH: Here’s your first hands-on look at the iPhone 7

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iPhone 7 review: Apple's lead in smartphones is pretty thin

• Steve Kovach
 

• 8h
• 24,295
 
• 40
 

Hollis Johnson/Business Insider

The headphone jack is gone.

Get over it.

In the weeks leading up to the iPhone 7's debut, no issue seemed more important in the tech world than Apple's decision to kill the headphone jack. The move has been called "user-hostile and stupid" by detractors and praised as brilliant and forward-thinkingby Apple fans. And now that the iPhone 7 is finally here, you're probably left scratching your head, wondering why Apple killed something that is so ubiquitous among gadgets.

You can't really judge the controversial move until you live with it for a few days.

I've been using the new iPhone 7 and iPhone 7 Plus since Apple unveiled the devices last week. I survived. In fact, the missing headphone jack is such a minor nuisance that I barely noticed. (I've also been testing the new wireless AirPods, which you can read about here.)

Headphone jacks aside, however, very little will shock you about the iPhone 7. In fact, that might be deliberate. It looks almost exactly like the iPhone 6s and the iPhone 6 before it, more like an iPhone 6ss than a brand-new generation of iPhone. Almost all of the new improvements are great — from the camera to the new home button — but they are also largely invisible.

The iPhone 7 goes on sale Friday starting at $649. The Plus model starts at $769.

Goodbye, headphone jack

Here's the biggest problem with the iPhone 7's missing headphone jack: It's not necessarily that you can't use regular headphones with it (you can, thanks to an included dongle); it's that standard headphone jacks are everywhere you look. Because Apple included a pair of EarPods with every iPhone, they quickly became some of the most popular headphones in the world.

The iPhone 7 comes with new EarPods that are almost exactly the same except they plug into the Lightning port, which is found only on Apple devices. That essentially forces you to carry around two pairs of headphones if you want to be sure you can plug into anything you want.

Apple includes Lightning EarPods with the iPhone 7. Hollis Johnson/Business Insider

A recent example: When I was flying back to New York last week, I wanted to watch a movie on Delta's in-flight entertainment system. But I had a shiny new pair of the Lightning EarPods, and Delta's system requires the standard jack. That means I had to pull out a pair of regular EarPods from my iPhone 6. Bluetooth was out of the question.

That will be the biggest problem as people adjust to the death of the headphone jack. Listening to music through Lightning or Bluetooth headphones is a breeze on the iPhone 7, but Apple has ignored the fact that the rest of the world is using the original standard.

It will also take time. I'm usually scared to make predictions, but my bet is that there will be an adjustment period for a year or two, and then everyone will settle into using Lightning or wireless headphones. And before long, most major smartphones will end up following Apple's lead and ditch the headphone jack too.

The headphone-jack adapter. Hollis Johnson/Business Insider

As for me, I listen to most of my music on my iPhone anyway, so the transition wasn't a big deal at all. The Lightning EarPods work just fine, and the new AirPods are an intriguing bet by Apple to push us toward wireless. Plus, there are plenty of excellent wireless Bluetooth headsets to choose from, including some new models coming from Beats later this year, that will work with the iPhone 7. I never found myself yearning for a pair of regular headphones. Everything you need is right in the box, including that handy dongle that makes it possible to listen to your old headphones if you have a pair you're in love with.

The necessity of killing the headphone jack is still up for debate. (And boy will we hear people endlessly arguing about it over the coming weeks.) But it happened, and it's honestly not that bad. You'll be fine.

An old design

My only major criticism with the iPhone 7 is how little the design has changed. It is nearly identical to the iPhone 6s from last year and the iPhone 6 before that. While the iPhone 7 looks great on its own, it is disappointing to see Apple's designs leapfrogged by Samsung's gorgeous Galaxy S7 and Galaxy Note 7 (when it doesn't explode, of course).

Apple used to pride itself on pushing design standards forward, with the rest of the industry attempting to copy or catch up. Apple's rivals have perfected their designs, but the company's response has been to release the same look for the third year in a row.

I know it might sound superficial to focus on design so much, but it is something users take seriously, especially on a device they carry around and use all the time. It is hard to get excited about something new when it looks very similar to what you've seen before.

Hollis Johnson/Business Insider

Still, there are some slight changes. Those unsightly antenna lines on the back have been moved to the edge so they're not very noticeable. The camera bump is also significantly larger to accommodate a new camera sensor that takes better photos in low light. And there are two great new colors: jet black and matte black.

Jet black is the most striking color, and I bet it is the one most people will choose to show off that they have the iPhone 7. It's so shiny that you can literally see your reflection in it, and it feels slick in the hand.

It is also a fingerprint magnet. Simply holding this thing for a few seconds covers it in smudges, and Apple has warned that scratches may show up easily. So if you go with the jet-black option, get a case. Jet black is also available only in the higher-storage tiers, 128 GB or 256 GB, which cost $100 and $200 more than the base models.

I like the matte-black look a lot better, though. It's made from anodized aluminum and has a futuristic look to it, like something Batman would use. If you're having trouble choosing between jet and matte, trust me — go with matte.

Camera

From a hardware perspective, the camera is the most noticeable improvement. Both the iPhone 7 and the 7 Plus have larger sensors that pull in more light for better photos. They can also more accurately represent the colors in photos, which show up nicely on the phone's improved screen.

But the dual-camera system on the iPhone 7 Plus is the real star. Each camera takes a photo at the same time and stitches them together. That allows you to shoot portraits with the professional-looking "bokeh" effect, which blurs background objects (though this will require a software update coming later this year).

Hollis Johnson/Business Insider

For now, the real benefit of the secondary telephoto lens is zooming. For the first time, the iPhone has optical zoom, which means you can zoom without the reduction in quality that occurs with a digital zoom. The telephoto lens also allowed Apple to push the iPhone 7 Plus' digital zoom up to 10x.

It makes a difference only when you see it in action, so here's a photo of my cat Larry taken at normal 1x zoom:

Steve Kovach/Business Insider

And here he is at 2x optical zoom:

Steve Kovach/Business Insider

Not bad, right?

It's easily one of the best cameras available on a phone, and the dual-camera system is a clever way to squeeze more out of the normal physical limitations most smartphone cameras have. It won't replace your DSLR, but it's pretty darn close.

What else?

There are a handful of other notable features in the iPhone 7, starting with one you will use more than any other: the new home button.

While the home button looks the same, it is no longer a mechanical switch that you physically press in. Instead, it's a pressure-sensitive sensor that vibrates slightly to give you the impression that you're pushing it. The change helps with the iPhone 7's water resistance and durability — it's impossible to wear out a button that doesn't move, after all — but it did take me about a day to get used to after using a traditional home button all these years. You can also adjust the vibration level of the button so that it feels comfortable.

Water resistance is another huge, overdue feature in the iPhone 7. For the first time, the iPhone is rated under the IP67 standard, meaning it can survive under a few meters of water for up to 30 minutes. That doesn't mean you should swim or bathe with the iPhone 7, but you don't have to worry if you drop it in water or spill something on it. Just dry it off and you're good to go.

The iPhone 7 will survive underwater, but don't go swimming with it. Hollis Johnson/Business Insider

The built-in speakers have been improved too. An extra one is now embedded in the receiver at the top of the phone so that you can listen in stereo. It's noticeably louder and clearer.

Battery life also got a boost, though not by as much as I was hoping for. Apple says you can get up to two hours more out of the iPhone 7 and one extra hour with the iPhone 7 Plus compared with last year's models. I definitely noticed the improvement, but if you're like me and use your phone all day, then you'll most likely still find yourself hunting for a charger a lot.

Another good move: The 16 GB storage option is finally gone. For years, that wasn't enough storage for most people, and it seems as if Apple finally realized that. The iPhone 7 now starts with 32 GB of storage and goes up to a whopping 128 GB or 256 GB, more than you'll ever need. Thirty-two GB should be enough for the average user, but a lot of you will want to get the 128 GB model. Only get the 256 GB model if you like keeping lots of video stored on your phone.

Finally, there's a new zippy processor inside the iPhone 7 called the A10. While I didn't notice a major improvement in day-to-day activities like checking Instagram, sending emails, or scrolling through Twitter, it is designed to work well with heavier apps like rich games.

If a lot of these seem like minor, iterative updates, that's because they are. The iPhone 7 isn't a radical change, but if you add everything up, it does amount to a pretty nice update.

Skye Gould/Business Insider

Why the iPhone wins

As I've written several times before, the iPhone's thinning lead in the smartphone world is no longer because of great hardware and design; it's because of the strength of iOS. After all these years, iOS continues to offer the most consistent updates and new features. Plus, it has the strongest developer community, with the best apps and new updates launching on iPhone before they come to Android. ("Super Mario Run," anyone?)

iOS 10, which comes with the iPhone 7 and launches on other iPhones this week, is the biggest update to the iPhone software I've seen in years. Notifications are better, widgets have richer information, and iMessage has been revamped from top to bottom to become its own mini social network. Even if you don't upgrade to the iPhone 7, it will make your old iPhone feel fresh and new again.

None of the competitors have that advantage, and unless Android cleans itself up, the iPhone will remain on top.

As for the iPhone 7, it's the best phone you can buy. I don't recommend upgrading if you have an iPhone 6s, but there are enough improvements here to make it a worthwhile upgrade for just about everyone else.

SEE ALSO: Everything new in the iPhone 7

NOW WATCH: Here's what it's like using the iPhone 7 underwater

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More: Apple iPhone 7 Reviews BI Graphics

Oil prices are on the brink of another big crash

• Will Martin
 

• 7h
• 12,172
 
• 7
 

REUTERS/Shamil Zhumatov

The price of oil could be set for another substantial drop following news from one of the oil industry's most respected organisations that the global supply-and-demand problem will take longer to clear than had been previously expected.

"Global oil demand growth is slowing at a faster pace than initially predicted," the International Energy Agency's most recent Oil Market Report argues.

"For 2016, a gain of 1.3 mb/d is expected — a downgrade of 0.1 mb/d on our previous forecast due to a more pronounced 3Q16 slowdown," the report said. "Momentum eases further to 1.2 mb/d in 2017 as underlying macroeconomic conditions remain uncertain."

Oil will remain in oversupply until at least the end of the first half of 2017, the IEA argues. Previous predictions in the markets had pointed to a rebalancing by the end of 2016.

The September edition of the Oil Market Report, one of the most watched monthly releases in the oil industry, shows that during August, OPEC producers increased productions to near record levels, further exacerbating the gulf between supply and demand, something that will almost inevitably lead to further slides in the price of the world's most important commodity.

"OPEC crude production edged up to 33.47 mb/d in August — testing record rates as Middle East producers opened the taps," the IEA reported. "Kuwait and the UAE hit their highest output ever and Iraq lifted supplies. Output from Saudi Arabia held near a record, while Iran reached a post-sanctions high. Overall OPEC supply stood 930 kb/d above a year ago."

Oil fell on news of the report's findings, and at about 11:25 a.m. BST (6:25 a.m. ET) both major benchmarks were lower by more than 2%. US West Texas Intermediate crude was down 2.53% at $45.12, while Brent crude was 2.17% down. Here's how US crude looked a few minutes ago:

Investing.com

The lack of a rebalancing is causing people to scratch their heads, the report noted, saying: "With the price of oil at current levels, one would expect supply to contract and demand to grow strongly. However, the opposite now seems to be happening."

Saudi Arabia and Russia hold the keys

The oil industry was given some hope last week that an agreement between Russia and Saudi Arabia — two of the world's most powerful producer nations — to freeze production could be forthcoming, helping to rebalance the markets.

In what was touted as a "significant announcement," however, the Saudi oil minister, Khaled al-Falih, told reporters at the G-20 conference in China that the two countries held discussions about the state of the oil markets that brought them "closer together."

This was a major disappointment to many in the markets, who had expected an announcement of a decisive plan of action, rather than a pretty lukewarm announcement of vague "talks" between the nations.

That announcement came after Saudi Deputy Crown Prince Mohammed bin Salman told Russian President Vladimir Putin on the sidelines of the summit that cooperation between the two countries would bring benefit to the global oil market, according to a report from Reuters.

Russia and Saudi Arabia are probably the two most important oil producers, with Saudi Arabia the de facto leader of the OPEC cartel of oil-producing nations. Russia, alongside the US, is one of the two biggest non-OPEC producers. What the two nations do regarding oil policy has profound effects on the markets. For example, at April's massively anticipated OPEC meeting about a freeze in production, Saudi Arabia refused to cooperate unless Iran joined in any production freeze, and as a result the meeting ended up as a damp squib.

With the two nations starting to work together, hopes for a solution to the massive glut in the oil industry are rising. We have seen promises of cooperation before, however. For instance, in August, Russia's oil minister, Alexander Novak, told a Saudi newspaper: "With regard to the cooperation with Saudi Arabia, the dialogue between our two countries is developing in a tangible way, whether in the framework of a multiparty structure or on a bilateral level."

While both Saudi Arabia and Russia seem to be talking a good game on cutting production, there hasn't been any decisive action on a freeze, and that is what seems to be dominating market thinking right now. Until the two nations stop talking and actually do something material to address the imbalances in the markets, prices will remain depressed.

NOW WATCH: KRUGMAN: Financial markets aren't taking a Trump victory very seriously

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Goldman Sachs plans to use retail money to make Wall Street-style profits

• Olivia Oran, Reuters

• 6h
• 2,461
 
• 4
 

Goldman Sachs CEO Lloyd Blankfein. Goldman Sachs

NEW YORK (Reuters) - As Goldman Sachs has built its US consumer bank, it has established a team to put its deposits to work on Wall Street, a telling development about Goldman's ambitions for the retail bank.

Led by 40-year-old Goldman partner and credit trading veteran Gerald Ouderkirk, the team's job is to use consumer deposits and other types of funding for trades, investments and big loans to earn profits, people familiar with the matter told Reuters.

The existence of the team, which has not been previously reported, was set up in mid-2015 and is formally known as the institutional lending group. Lately, it has ramped up activities as Goldman Sachs looks to do more lending broadly.

Some Goldman executives bristle at the idea that Ouderkirk's team is similar to chief investment offices, or CIOs, at bigger banks such as JPMorgan Chase and Bank of America, since Chief Financial Officer Harvey Schwartz and Treasurer Robin Vince still manage the bank's day-to-day liquidity, including how much capital Ouderkirk gets to work with.

Goldman spokesman Andrew Williams declined to comment or make Ouderkirk available for an interview.

Goldman became a bank holding company at the height of the financial crisis in 2008, as did rival Morgan Stanley. Although Morgan Stanley started moving toward traditional lending activities after agreeing to acquire Smith Barney in 2009, Goldman's progress has taken longer.

For years, bank officials denied any intent to transform Goldman Sachs into the sort of bank that dealt with Main Street consumers. They argued Goldman's bank would only cater to the wealthy individuals and corporations that had long been its client base.

But management's thinking has evolved as regulators have pushed the industry to get back to the basics of banking, said the sources, who were not authorized to discuss strategy publicly. For Goldman, deposits also represent a more stable and stickier type of funding than other types of short-term debt it has relied on historically.

Steven Chubak, an analyst with Nomura, said he believes Goldman's business model is still tethered to institutional clients, but "given the regulatory pressure, any efforts to diversify revenue stream are sensible."

Last year, Goldman announced it would buy GE Capital Bank's US online deposits. It plans to roll out an online lending platform for retail customers later this year. The firm's deposits now total $123.7 billion.

Named Marcus, after 1869 founder Marcus Goldman, the online lender would offer consumer loans of a few thousand dollars, and would surely expand the loan book. But Ouderkirk's team, which may put millions of dollars on the line with each transaction, may play a bigger role in increasing the profitability of Goldman's bank.

BOOSTING MARGINS

Ouderkirk joined Goldman in 1998 and made a name for himself structuring profitable bets against the mortgage market in the run-up to the financial crisis.

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange Thomson Reuters

Known as Jerry, he most recently served as co-head of global structured credit trading. Ouderkirk became head of the institutional lending group last August. He oversees a team of around half a dozen people and reports to Stephen Scherr, who is CEO of Goldman's US bank and chief strategy officer of the broader company.

Ouderkirk has been coordinating with executives across Goldman's merchant bank, investment bank, private bank and trading desks to find ways to use Goldman's balance sheet most profitably.

For example, Goldman's real estate group might have a client in need of a multibillion-dollar commercial mortgage to buy a building. After underwriters vet the borrower, Ouderkirk's group might offer deposits to fund it. Some of that debt would be distributed to outside investors, but Goldman's bank would retain a slice of it to earn interest income.

Boosting that income is especially important for Goldman Sachs, which is now earning scant profits from its deposits and facing challenges in other big businesses, like bond trading.

Goldman generated a net interest margin of 1.25% in the second quarter, the second-lowest among the top 30 banks by asset size, according to Federal Deposit Insurance data. That metric is an important one for banks, showing the difference between the interest they pay for funds and the interest they earn from loans.

The average net interest margin for all U.S. banks is around 3%. Morgan Stanley, Goldman's closest peer, has a margin of 1.78%.

Before Goldman set up the institutional lending group, a committee of senior executives from across the firm had to approve large financial commitments. But as its bank has grown, and the volume of loan approvals has risen substantially, it became evident that a separate group was needed in addition to manage the task, people familiar with the matter said.

Goldman's institutional lending group is still in its infancy, and it is unclear whether regulators had any say over its development. A spokesman for the US Federal Reserve, Goldman's prudential regulator, declined to comment.

(Reporting by Olivia Oran in New York; Editing by Lauren Tara LaCapra and Grant McCool)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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