US lawmakers are calling for an investigation into Goldman’s role in the failure of Silicon Valley Bank

Leading Congressional Democrats have called for a state investigation into Goldman Sachs’ role in the Silicon Valley bank collapse and urged regulators to consider rolling back profits from the investment bank handling a $21 billion deal for SVB should.

“As Goldman Sachs stands ready to capitalize on the SVB’s failure, we urge you to analyze whether Goldman Sachs has acted at arm’s length in its role as adviser to the SVB,” lawmakers wrote in a letter to the SVB on Friday US Attorney General Merrick Garland, Chairman of the Securities and Exchange Commission Gary Gensler and Martin Gruenberg, Chairman of the Federal Deposit Insurance Corporation.

The letter was led by Adam Schiff, the Democratic congressman from California, and was co-signed by 19 other Democrats representing counties in the state where SVB was headquartered. California Democrats played a key role in crunch talks last weekend that resulted in a package of contingency measures that would guarantee all SVB deposits and boost confidence in the banking system.

SVB had turned to Goldman to shore up its finances in late February as the bank prepared for a downgrade by rating agency Moody’s. Goldman drew up a plan to raise new cash for the bank and also agreed to buy part of SVB’s portfolio of government bonds and other government-backed debt.

SVB said it sold the $21.45 billion portfolio of securities to Goldman “at negotiated prices,” without further detail, in a filing with the SEC. The sale resulted in a $1.8 billion loss for SVB.

The two transactions would have been handled by separate parts of the bank. It is industry standard to isolate the different teams.

Goldman and SVB called off the capital raise as the company’s share price plummeted and news of a bank run increased. Customers tried to withdraw $42 billion in one day, and before shares could open for trading last Friday, US regulators took over the bank.

The DoJ, as well as the SEC, has launched an investigation into the collapse of SVB.

Lawmakers wrote in the letter: “We support your efforts to launch an investigation and hope that, unlike in 2008, we will hold bank executives accountable by ensuring they are held accountable – the burden of their actions should not rest on the.” end up on the shoulders of consumers or taxpayers. ”

Goldman and the DoJ did not immediately respond to a request for comment. An SEC spokesman said its chairman, Gensler, would respond directly to members of Congress and not through the media. The FDIC declined to comment.

The FDIC has overseen an auction by the company’s commercial bank and signaled Friday that they are willing to consider the prospect of recovering losses at SVB to seal a deal.

The intervention of Schiff and others comes amid a wider scramble on Capitol Hill by lawmakers to respond to the collapse of SVB. Progressive Democrats have seen the bank’s failure as an opportunity to push for tighter banking regulations, while Republicans have dismissed calls for more regulation and accused regulators of not doing their job properly.

Schiff is one of several lawmakers who introduced legislation to recover compensation from executives of failed banks, including bonuses and profits from stock sales. The White House issued a statement on Friday supporting efforts to tighten penalties for executives of failed banks. US lawmakers are calling for an investigation into Goldman’s role in the failure of Silicon Valley Bank

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