US, Goldman Sachs reach $5B settlement over risky mortgages


WASHINGTON (AP) — The Justice Department today announced a roughly $5 billion settlement with Goldman Sachs over the sale of mortgage-backed securities leading up to the 2008 financial crisis. The government accused the bank of misleading investors about the quality of its loans.

The $5.06 billion deal resolves state and federal probes into the sale of shoddy mortgages in the run-up to the housing bubble and subsequent economic meltdown.

It requires the bank to pay a $2.39 billion civil penalty and an additional $1.8 billion in relief to underwater homeowners and distressed borrowers, along with $875 million in other claims.

"This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail," Acting Associate Attorney General Stuart Delery said in a statement.

The agreement, smaller than deals reached with several of Goldman's Wall Street counterparts, is the latest multi-billion-dollar civil settlement arising from the economic meltdown in which millions of Americans lost their homes to foreclosure or found themselves jobless.

Other banks that settled in the last two years include Bank of America, Citigroup and JPMorgan Chase & Co.

More like this from vindy.com

Subscribe Today

Sign up for our email newsletter to receive daily news.

Want more? Click here to subscribe to either the Print or Digital Editions.