Goldman Sachs says it has reached a deal with US authorities over
charges that it used fraudulent marketing material to sell mortgage bonds
before the financial crisis.
The bank agreed to pay $5.1bn (£3.5bn) in civil
penalties and consumer relief.
The tentative deal was reached with the US Department
of Justice's Financial Fraud Enforcement Task Force.
The task force has been investigating how banks
advertised risky financial products before the financial crisis.
Goldman Sachs' chairman and chief executive, Lloyd
Blankfein, said in a statement: "We are pleased to have reached an
agreement in principle to resolve these matters."
The deal stems from an investigation into Goldman
Sachs' securitisation, underwriting and sale of residential mortgage-backed
securities (RMBS) from 2005 to 2007.
Goldman Sachs is one of several banks that have been
fined billions of dollars for marketing RMBS as a safe investment in the run-up
to the financial crisis.
The sale of RMBS played a significant role in the 2008
crisis. US banks have taken much of the blame for granting mortgages to
unqualified borrowers, then repackaging those loans as safe investments and
selling the risk on to others.
The deal settles civil claims from the Justice
Department, the New York and Illinois Attorneys General, the National Credit
Union Administration and the Federal Home Loan Banks of Chicago and Seattle.
The agreement is still subject to negotiations over
certain documentation.
Goldman Sachs has warned the deal will reduce its
fourth-quarter earnings by $1.5bn.
No comments:
Post a Comment