Goldman Sachs to pay $5B fine for RMBS activities

Agreement resolves civil claims tied to firm’s practices in lead-up to financial crisis

TRD New York /
Jan.January 14, 2016 06:15 PM

Investment banking giant Goldman Sachs is set to pay more than $5 billion to settle civil claims tied to the firm’s securitization, underwriting and sale of residential mortgage-backed securities in the lead-up to the global financial crisis.

The Battery Park City-based institution will pay nearly $2.4 billion in civil monetary penalties, as well as $875 million in cash payments and $1.8 billion in consumer relief, for its RMBS practices between 2005 and 2007, it said in a statement Thursday.

The consumer relief will include principal forgiveness for underwater homeowners and distressed borrowers, as well as financing for housing construction and support for debt restructuring and foreclosure prevention, Goldman said

The deal — agreed in principle and still subject to final approval — will resolve both “actual and potential” claims against the bank by the U.S. Department of Justice, the attorneys general of New York and Illinois, the National Credit Union Administration and the Federal Home Loan Banks of Chicago and Seattle.

“We are pleased to have reached an agreement in principle to resolve these matters,” Goldman chair and CEO Lloyd Blankfein said in a statement.

The firm said the agreement will reduce its fourth quarter earnings to the tune of $1.5 billion after tax. – Rey Mashayekhi


Related Articles

arrow_forward_ios
The bank is accused of systematically trying to foreclose on mortgages after the state’s six-year statute of limitations had passed. (Credit: iStock)

BNY Mellon faces suit over foreclosures from the housing crash

Seattle, Washington (Credit: iStock)

Good luck buying an affordable home in these US cities

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

They’re just like us! “Billionaire” manse buyer takes out $58M mortgage

Buyer sentiment was strong at the close of 2019 (Credit: iStock)

Home buyers start 2020 with drop in mortgage rates

(Credit: Getty Images, iStock)

Small Talk: Real Estate Predictions for 2020

Many are predicting a housing bubble (Credit: iStock)

Europe could be headed toward a housing crisis

Softbank CEO Masayoshi Son and Goldman Sachs CEO David Solomon (Credit: Getty Images)

Goldman Sachs will lead Phase II of SoftBank’s WeWork rescue plan

Jho Low and the Time Warner Center at 25 Columbus Circle (Credit: Getty Images)

Financier at center of 1MDB fraud case agrees to give up hundreds of millions of dollars

arrow_forward_ios
Loading...