Investment banking firm Goldman Sachs has agreed 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 company 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 underwriting practices between 2005 and 2007.
The consumer relief portion of the settlement 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. The deal (which is 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.
