Jan 20 (Reuters) – The U.S. Federal Reserve is probing whether or not Goldman Sachs Group Inc’s (GS.N) client enterprise had applicable safeguards in place because the financial institution ramped up lending, the Wall Road Journal reported on Friday, citing folks conversant in the matter.
Shares of the funding financial institution have been down almost 3% at $341.08 in afternoon commerce.
The central financial institution is worried the Wall Road big didn’t have correct monitoring and management techniques inside Marcus, its client unit, because it grew bigger, the report mentioned.
The probe, which grew out of a regular Fed overview of the enterprise in 2021 and intensified into an investigation final yr, can be analyzing cases of buyer hurt and whether or not they have been correctly resolved, the report added.
“The Federal Reserve is our major federal financial institution regulator and we don’t touch upon the accuracy or inaccuracy of issues referring to discussions with them,” a Goldman spokesperson advised Reuters.
Bloomberg Information reported in September that the financial institution’s Marcus unit was going through a Fed overview.
The probe would add to troubles for Goldman, which is executing a strategic pivot that features refocusing on its core buying and selling and funding banking enterprise after shedding cash in its client banking enterprise.
“One other investigation into the buyer enterprise makes Goldman’s foray into client look even worse, and might cut back administration credibility, notably given so many statements about GS’ means to handle danger and construct best-in-class platforms,” mentioned Mike Mayo, banking analyst at Wells Fargo, in a notice.
“The investigation, together with poor disclosure and different regulatory investigations, will improve the danger related to proudly owning GS and its price of capital.”
Goldman’s bank card enterprise can be being investigated by the Shopper Monetary Safety Bureau (CFPB), the financial institution disclosed final yr.
Reporting by Niket Nishant in Bengaluru and Saeed Azhar in New York; Enhancing by Maju Samuel and Devika Syamnath
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