Cyprus Mail

Democratic lawmakers urge US to probe Goldman’s role in SVB collapse

destroyed svb (silicon valley bank) logo
The logo of Swiss bank Credit Suisse is seen in front of an office building in Zurich, Switzerland October 26, 2022. REUTERS/Arnd Wiegmann/File Photo

A group of Democratic U.S. lawmakers sent a letter to regulators and the Justice Department requesting a probe into the role of Goldman Sachs Group Inc GS.N in the collapse of the Silicon Valley Bank (SVB)SIVB.O, the office of U.S. Representative Adam Schiff said on Friday.

The letter was sent to U.S. Attorney General Merrick Garland, Securities and Exchange Commission Chairman Gary Gensler, and Federal Deposit Insurance Corporation Chair Martin Gruenberg from Schiff and 19 other members of the California congressional delegation.

(We) wish to raise our concerns over the role of Goldman Sachs Group in advising SVB and in the purchase of its bond portfolio,” the letter said.

Californian regulators shuttered Silicon Valley Bank last Friday and appointed FDIC as receiver. It was the largest collapse since Washington Mutual went bust during the financial crisis of 2008. On Friday, the bank’s parent SVB Financial Group said it filed for reorganization under Chapter 11 bankruptcy protection.

U.S. prosecutors are investigating the SVB collapse, a source familiar with the matter told Reuters this week.

Goldman Sachs did not immediately respond to a request for comment on the letter by lawmakers.

SVB disclosed Goldman Sachs’ role as acquirer of their bond portfolio on Tuesday, March 14, the last day of a four business-day window the SEC affords for such disclosures, the lawmakers said in the letter.

“As Goldman Sachs is poised to profit from SVB’s failure, we strongly urge you to analyze whether Goldman Sachs operated at “arm’s length” in their role as advisor for SVB,” the letter added.

Financial stocks have lost over billions of dollars in value since Silicon Valley Bank and Signature Bank SBNY.O collapsed last week.

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