U.S. authorities are investigating Goldman Sachs after the banking giant advised California lender Silicon Valley Bank (SVB) in the weeks before its collapse, according to a Securities and Exchange Commission (SEC) regulatory filing on Thursday.
Goldman says it is “cooperating with and providing information to various governmental bodies in connection with their investigations and inquiries,” according to the filing. SVB hired Goldman to advise them prior to the bank’s failure, and the banking giant recommended SVB sell it a large portfolio of securities at a substantial loss to raise capital, a transaction that proceeded SVB’s collapse on March 10.
Goldman suggested SVB sell it a $21 billion portfolio of U.S. government debt; the California lender followed the advice just hours later and eventually disclosed it had lost $1.8 billion in the transaction, according to The New York Times. The portfolio’s value plunged because of increasing interest rates, according to the NYT. Goldman stood to garner more than $100 million in fees from the deal. (RELATED: Shocker: One Of America’s Most Politically Connected Banks Is Due For A Huge Profit Off Other Bank’s Failure)
“The SEC does not comment on the existence or nonexistence of a possible investigation,” an SEC spokesperson told the Daily Caller News Foundation (DCNF).
WASHINGTON, DC – MARCH 29: Federal Deposit Insurance Corporation Chairman Martin Gruenberg (L) testifies during a hearing held by the House Financial Services Committee March 29, 2023 in Washington, DC. The committee heard testimony on responses to the failures of Silicon Valley Bank and Signature Bank. Also pictured is Treasury Undersecretary for Domestic Finance Nellie Liang (R). (Photo by Win McNamee/Getty Images)
Since SVB and Signature’s collapses in March, another major lender, First Republic Bank, failed on Monday, and many regional bank stocks have plummeted since.
In addition to potentially profiting from the 2023 banking crisis, Goldman also gained $13 billion during the bailout of finance and insurance giant AIG when former Goldman CEO, Hank Paulson, was Treasury secretary in 2008, according to the NYT. Paulson spoke with then-Goldman CEO Lloyd Blankfein over 20 times during the week of the AIG bailout, significantly more than with any other banking executives.
Goldman Sachs did not immediately respond to the DCNF’s request for comment.
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