An investigation has been launched into business deals between investment banks and Greece by the Federal Reserve (Fed).
Bernard Bernanke, chairman of the Fed, made the announcement while speaking to a Senate Banking Committee after chairman Chris Dodd raised the issue.
Goldman Sachs is one of a number of financial institutions to have set up credit swaps with Greece, which allegedly helped disguise the extent of the country’s debt.
European Regulators are thought to have been unaware of the swaps taking place until earlier this month.
Mr Bernanke told Congress that the Fed is asking a “number of questions” regarding the relationship between financial companies in the US and Greece.
“Obviously, using [credit default swaps] in a way that potentially destabilizes a company or a country is counterproductive ... we’ll certainly be evaluating what we learn from the activities of the holding companies that we supervise here in the US.”
Meanwhile, Gerald Corrigan, managing director at Goldman Sachs, recently told a Treasury Select Committee in the UK that credit swaps the bank conducted only reduced Greece’s debt by a small amount.
However, he added: “With the benefit of hindsight, it seems very clear that standards of transparency could have been and should have been higher.”
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