Goldman Sachs to pay $5bn to settle mortgage claims

The settlement related to Goldman’s securitization, underwriting and sale of RMBS from 2005 to 2007.

Goldman said the tentative deal is with the Department of Justice’s Financial Fraud Enforcement Task Force

The Wall Street bank said it would pay a civil penalty of $2.4bn to settle with the authorities, as well as payments of $875m and $1.8bn in consumer relief, such as “forgiveness for underwater homeowners and distressed borrowers”.

Goldman said the tentative deal is with the Department of Justice’s Financial Fraud Enforcement Task Force, which has been investigating fraud by banks in marketing residential mortgage-backed securities (RMBS), the financial assets that were at the heart of the 2007-2008 meltdown of the US financial sector.

Goldman chairman and chief executive Lloyd Blankfein

The settlement related to Goldman’s securitization, underwriting and sale of RMBS from 2005 to 2007.

Goldman said the agreement will resolve civil claims on the issue with the Justice Department, the National Credit Union Administration – which represents some financial institutions that failed after their RMBS investments soured – and Federal Home Loan Banks in Chicago and Seattle. Also in the settlement are the state attorneys general of Illinois and New York.

“We are pleased to have reached an agreement in principle to resolve these matters,” said Goldman chairman and chief executive Lloyd Blankfein.

 

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