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Archegos fallout: US Senate Banking chair presses Wall Street banks on Archegos ties

WASHINGTON: The Democratic chair of the US Senate Banking Committee has written to a number of massive banks, together with Credit score Suisse and Japan’s Nomura, asking them for data on their relationship with New York-based Archegos Capital Administration after the fund imploded final month.

Senator Sherrod Brown requested the financial institution’s chiefs to element how their establishments got here to do enterprise with Archegos, a household workplace run by ex-Tiger Asia supervisor Invoice Hwang. Archegos’ soured leveraged bets on media shares have left the fund and banks that financed its trades nursing billions of {dollars} in losses.

Along with Credit score Suisse and Nomura, which misplaced $4.7 billion and $2 billion, respectively, Brown despatched the letters to Goldman Sachs and Morgan Stanley which didn’t lose cash on the trades, Reuters and different media retailers have reported.

Representatives of banks declined to remark or didn’t instantly reply to a request for remark.

The letters sign that the fallout from the Archegos meltdown is spreading in Washington, the place policymakers are already mulling new guidelines on nonbanks and the way conventional banks could also be uncovered to their dangers.

“I’m troubled, however not stunned, by the information reviews that Archegos entered into dangerous derivatives transactions facilitated by main funding banks,” Brown wrote within the letters.

“The large transactions, and losses, elevate a number of questions relating to [the banks’] relationship with Archegos and the therapy of so-called ‘household places of work,’ Mr. Hwang’s historical past, and the transactions.”

Brown pressed for particulars on how banks do enterprise with “household places of work,” evenly regulated funds that handle people’ and households’ private fortunes, the providers supplied to them by the banks, and the way the banks determine on the quantity of credit score to increase.

He additionally quizzed the lenders on whether or not financial institution supervisors or financial institution threat committees signed off on their dealings with Archegos, given Hwang had beforehand been punished by the US Securities and Trade Fee for alleged insider buying and selling.

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