TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Goldman Sachs to pay $5 billion in mortgage settlement
This June 4, 2015, file photo, shows a sign indicating a site has been sold in a new home development in Nashville, Tenn
Change Size
This June 4, 2015, file photo, shows a sign indicating a site has been sold in a new home development in Nashville, Tenn. One week after the Federal Reserve raised short-term interest rates from record lows, the average on a 30-year fixed-rate mortgage went the other way: It dipped to 3.96 percent from 3.97 percent last week, mortgage giant Freddie Mac said on Dec. 24, 2015. (AP/Mark Humphrey, File) (AP/Mark Humphrey, File)
T
span class="inline inline-center">This June 4, 2015, file photo, shows a sign indicating a site has been sold in a new home development in Nashville, Tenn. One week after the Federal Reserve raised short-term interest rates from record lows, the average on a 30-year fixed-rate mortgage went the other way: It dipped to 3.96 percent from 3.97 percent last week, mortgage giant Freddie Mac said on Dec. 24, 2015. (AP/Mark Humphrey, File)
Goldman Sachs said Thursday it will pay roughly $5 billion to settle federal and state probes of its role in the sale of shoddy mortgages in the years leading to the housing bubble and subsequent financial crisis.
Coming nearly eight years after the crisis, the settlement is by far the largest the investment bank has reached related to its role in the meltdown. But the payment is dwarfed by those made by some of its Wall Street counterparts.
Goldman will pay $2.39 billion in civil monetary penalties, $875 million in cash payments and provide $1.8 billion in consumer relief in the form of mortgage forgiveness and refinancing.
The US Department of Justice, the attorneys general of Illinois and New York, and other regulators who are part of the settlement have not officially signed off on the deal, which could take some time.
The government agencies are part of a joint state-federal task force created by President Barack Obama after the 2008 financial crisis that has extracted some of the largest settlements out of Wall Street.
Goldman, like other Wall Street banks, has been under investigation for allegedly misleading investors on the safety of the securities they created by bundling and selling mortgages.
Many of those poorly written mortgages went bad, triggering the financial crisis that spawned the Great Recession and the multi-billion government bailouts that have caused so much political anger in recent years.
"We are pleased to have reached an agreement in principle to resolve these matters," Goldman Sachs Group Inc. Chairman and CEO Lloyd Blankfein said in a prepared statement.
As a result of the settlement, Goldman said its fourth quarter earnings will be reduced by $1.5 billion. The firm earned $1.33 billion in its third quarter. Goldman is scheduled to report its results on Jan. 20.
A spokesman from the Department of Justice declined to comment on Goldman's announcement.
Goldman has been one of the last banks to settle with regulators for its role in the financial crisis. Bank of America, JPMorgan Chase and others all reached larger, more substantial settlements in 2014 and 2015.
Bank of America individually has paid out tens of billions of dollars in fines as a result of its role in the housing crisis. When JPMorgan reached a similar settlement with the same task force, it paid out $13 billion.
Goldman shares fell 9 cents to $161.30 in aftermarket trading. (rin)
Eric Tucker contributed to the story.
