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March 17, 2023

Schiff Leads Letter to DOJ, FDIC, SEC Requesting Investigation Into Goldman Sachs’ Role in SVB Collapse

Burbank, California – Today, Rep. Adam Schiff (D-Burbank) led 20 members of the California Congressional delegation in sending a letter to Attorney General Merrick Garland, SEC Chairman Gary Gensler, and FDIC Chair Martin Gruenberg, asking for an investigation into the role Goldman Sachs Group played in the Silicon Valley Bank failure – the second largest bank failure in American history.

 

SVB’s collapse has triggered a banking crisis both at home and abroad. The repercussions for Californians and workers around the country have been immense. Many California workers depended on SVB for processing their paychecks and many of the bank’s depositors were start-up companies and small businesses. The prioritization of profits over the safety of deposits, loosened financial regulations that passed under the Trump administration, and mismanagement by bank executives have contributed to the failure.

 

Today’s letter by members of the California delegation follows reports that AG Garland, Chairman Gensler,  and Chairman Gruenberg were investigating last week’s collapse of SVB, and SVB’s eleventh-hour disclosure that Goldman Sachs Group served as an advisor as they tried to raise capital to stave off closure. As the subsequent acquirer of their $21 billion securities portfolio, which left SVB at a significant loss, Goldman Sachs stand to profit more than $100 million.

 

The letter asks the DOJ, SEC, and FDIC to investigate whether Goldman Sachs operated at “arm’s length” in their role as advisor for SVB.

“It is reported that you may be in the preliminary phase of investigating last week’s collapse of Silicon Valley Bank (SVB)[1]— the second largest bank failure in American history. We strongly support such an investigation, and also wish to raise our concerns over the role of Goldman Sachs Group in advising SVB and in the purchase of its bond portfolio,” wrote the members. “…We support your efforts to launch an investigation and hope that unlike 2008, we hold bank executives accountable by ensuring they are held responsible— the burden of their actions should not land on the shoulders of consumers or taxpayers. As the White House considers taking administrative action supporting legislation to “claw back” bonus compensation and profits made from stock sale gains[6], and as you investigate the collapse of SVB and any statutory or criminal wrongdoing, we urge you to examine Goldman Sachs receipt of over $100 million and whether it should likewise be reclaimed on behalf of depositors.”

The letter was led by Schiff and signed by California Reps. Nanette Barragán, Salud Carbajal, Tony Cárdenas, Lou Correa, Mark DeSaulnier, Anna Eshoo, Robert Garcia, Jimmy Gomez, Josh Harder, Jared Huffman, Sydney Kamlager-Dove, Barbara Lee, Mike Levin, Ted Lieu, Zoe Lofgren, Doris Matsui, Kevin Mullin, Raul Ruiz, and Mike Thompson.

 

Earlier this week, Schiff introduced legislation with Senator Blumenthal and Congressman Levin to impose claw backs on profits made from bonuses and stock sales by executives when a bank fails.  Just before SVB failed, executives reportedly received bonuses. Greg Becker, who was the CEO of SVB, reportedly sold $3.6 million in SVB stock just days before the bank’s collapse, potentially profiting off the impending demise of the very bank he managed.

The full text of the letter can be found here.

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