Securities Law

Goldman Sachs OKs $5B settlement of civil claims over toxic mortgage bonds

One of Wall Street’s best-known financial institutions has agreed to pay more than $5 billion to settle claims that it sold toxic bonds based on residential mortgages between 2005 and 2007, as the nation’s mortgage market was about to go into a meltdown.

The agreement in principle by Goldman Sachs would conclude civil claims by the Department of Justice, the attorneys general of Illinois and New York and banking groups concerning the investment bank’s securitization, underwriting and sale of the bonds, according to Forbes and Housing Wire.

The bank’s settlement with the Residential Mortgage-Backed Securities Working Group of the U.S. Financial Fraud Enforcement Task Force provides for a $2.385 billion civil fine, $875 million in cash payments and $1.8 billion in consumer relief, including mortgage principal relief.

It must still be OK’d by the DOJ and other entities before it is final.

A Goldman Sachs news release provides more details.

Related coverage: “Who Really Won? Record $550M SEC Fine No Big Deal to Goldman Sachs, Says NY Times”

Bloomberg: “How Goldman Sachs Made Money Mid-Crisis”

We welcome your comments, but please adhere to our comment policy and the ABA Code of Conduct.

Commenting is not available in this channel entry.