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

Silicon Valley Bank location in San Francisco
The Silicon Valley Bank branch office is pictured in downtown San Francisco, California, U.S., March 13, 2023. REUTERS/Kori Suzuki/File Photo

WASHINGTON, March 17 (Reuters) - 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.

Reporting by Kanishka Singh and Ismail Shakil; editing by Tim Ahmann and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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Kanishka Singh is a breaking news reporter for Reuters in Washington DC, who primarily covers US politics and national affairs in his current role. His past breaking news coverage has spanned across a range of topics like the Black Lives Matter movement; the US elections; the 2021 Capitol riots and their follow up probes; the Brexit deal; US-China trade tensions; the NATO withdrawal from Afghanistan; the COVID-19 pandemic; and a 2019 Supreme Court verdict on a religious dispute site in his native India.