US banking major Goldman Sachs Group has agreed to pay $5.06bn to settle allegations that it sold risky residential mortgage-backed securities (RMBS) leading up to the financial meltdown.
The settlement is the result of the bank’s conduct in the packaging, securitization, marketing and sale of RMBS between 2005 and 2007.
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As part of the settlement, the New-York based lender will pay a $2.39 billion civil penalty, $1.8bn in consumer relief, as well as make cash payments of $875m, the U.S. Department of Justice in a statement said.
Acting Associate Attorney General Stuart Delery said: "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."
The latest settlement is the fifth multibillion-dollar deal reached by the US regulators with the major banks. Other banks to reach similar settlements in the last couple of years include Bank of America, Citigroup and JPMorgan Chase.
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By GlobalData
