Members of the California Congressional Delegation have called on federal authorities to investigate Goldman Sachs’ (NYSE:GS) role in the collapse of Silicon Valley Bank, owned by SVB Financial (SIVB).
The news sent Goldman’s (GS) stock 4.2% lower ahead of the closing bell.
In a letter, 20 members of the congressional delegation asked the Justice Department, Federal Deposit Insurance Corp., and Securities and Exchange Commission to investigate if Goldman (GS) operated at “arm’s length” while serving as an advisor for SVB (SIVB), Reuters reported.
SVB (SIVB) sold a portfolio of securities with a book value of $23.97B to Goldman (GS) last week before the bank was shut down by the FDIC. The sale resulted in a net loss for SVB (SIVB) of ~$1.8B.
The FDIC has been struggling to find bidders for the failed lender, with the biggest banks reluctant to make an offer. Goldman (GS) also passed on bidding as it is still struggling with the aftermath of its own misadventures in consumer banking. The FDIC is now reportedly open to discuss shouldering losses at SVB (SIVB).
Earlier in the day, SVB (SIVB) filed for Chapter 11 bankruptcy protection.
More on the bank crisis