Warren Buffett has always said there's a natural progression in which things go wrong: First come the innovators, next come the imitators, and then come the idiots.

Goldman Sachs (NYSE:GS) may have been the front-runner for all three steps. After leading the Wall Street herd for years as the brightest and most innovative bank on the planet, it fell victim to short-term credit market angst in September that nearly cost it its life. Now, rather than pioneering a new structure to adapt to Wall Street's paradigm shift, Goldman might simply imitate what other no-frills banks have been using for years: an online bank.

The Wall Street Journal reports that Goldman is considering launching an Internet-based bank, which it could use to raise deposits it needs now that it, along with Morgan Stanley (NYSE:MS) and American Express (NYSE:AXP), are officially bank holding companies.

Two thoughts come to mind about starting an online bank: the fierce competition, and what effect Goldman's top-tier name might have on the competition.

Several other banks and brokers offer ridiculously attractive online-banking products. E*Trade (NASDAQ:ETFC), for example, offers an online savings account yielding 3.3%, which is, amazingly, more than a 30-year government bond yields these days. Others, such as ING Direct, offer savings accounts yielding 2.75% and one-year CDs paying 3.75%. When you consider the deplorable state of short-term credit markets and the practically naught returns that can be had on the safest government bonds, you have to expect the profit margins for these online banks are slim, slim, slim.

On the other hand, simply using Goldman's brand name on a product that might be available to any average Joe would probably catch quite a bit of attention. For the same reason that AmEx attracts customers with its reputation of being the rich-man's choice, Goldman could probably entice customers that simply want to brag to their friends that they do their banking with a bank of such prestige.

Pretty incredible stuff when you think about it. The financial world's truly morphing before our eyes. Goldman reports earnings later this month -- perhaps we'll get more information about this latest move then.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. American Express Company is a Motley Fool Inside Value pick. The Fool owns shares of American Express Company and has a disclosure policy.