The U.S. Federal Reserve is probing whether Goldman Sachs Group Inc's consumer business had appropriate safeguards in place as the bank ramped up lending, the Wall Street Journal reported on Friday, citing people familiar with the matter.
Shares of the investment bank were down nearly 3% at $341.08 in afternoon trade.
The probe, which grew out of a standard Fed review of the business in 2021 and intensified into an investigation last year, is also examining instances of customer harm and whether they were properly resolved, the report added. "Another investigation into the consumer business makes Goldman's foray into consumer look even worse, and can reduce management credibility, particularly given so many statements about GS' ability to manage risk and build best-in-class platforms," said Mike Mayo, banking analyst at Wells Fargo, in a note.
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