Goldman Sachs settlement over mortgage fraud charges amounts to $5.1 billion

By

Goldman Sachs has confirmed that it is in negotiations with the US government to pay a $5.1 billon settlement in its current case that has it accused of falsely advertising residential mortgaged backsed securities (RMBS) as safe investments to millions of investors who eventually founded themselves losing a lot of money because of the risky bonds.

DW provides details of the settlement: about $2.4 billion will go to the US government, while $875 million and $1. 8 billion will be channeled towards consumer relief. The arrangement is being made with the Financial Fraud Enforcement Task Force of the U.S. Justice Department, which has been investigating the culpability of leading banks and other financial institutions in the economic meltdown which happened from 2006-2008. Goldman Sachs underwrote and sold RMBS, poor-quality bonds that were linked to shaky property investments, but touting them as surefire investments that would yield high returns.

However, a saturated property marketed crashed, revealing the low value of the mortgage banks. This was the catalyst that led to the closure of many companies that had invested in the RMBS. Many individuals who had invested heavily also lost their life savings. Goldman Sachs is one of the many Wall streets charged with fraud by the Department of Justice.

The BBC News quotes Goldman Sachs CEO and chairman, Lloyd Blankfied, who said that the bank was "pleased to have reached an agreement in principle" with the US government.

That satisfaction comes with a price, though. In an interview with Fortune, Blankfield said that the settlement will shave off $1.5 billion from their last-quarter earnings in 2015. The Goldman Sachs deal is the latest in a series of settlements made by banks which wanted to avoid messy civil and possibly criminal litigations over many years. Five of them made headlines in 2012 for a settlement that totaled $25 billion: Ally Financial, Bank of America, Ciitgroup, JP Morgan Chase, and Wells Fargo.

Tags
Goldman Sachs, Settlement, Fraud, Mortgage

© 2025 Lawyer Herald All rights reserved. Do not reproduce without permission.

Join the Discussion
More Law & Society
Kearra Thomas reportedly said she swerved and crashed

Suspect in Fatal Hit-and-Run Killed in a Separate Car Crash Weeks Later

Trump Epstein Files_04182025_1

Trump Doesn't Want to Release Epstein Files Because People's Lives Will Be 'Destroyed,' Ex-Fox Host Says

SoCal gardener arrested by ICE while working outside medical clinic

ICE Ignored Clinic Staff's Requests for Identification While Detaining Man Inside California Surgery Center, Lawyer Says

 U.S. President Donald Trump

Trump Administration Claims California Allowing Trans Athletes to Compete on Team of Choice Violates Title IX: Lawsuit