Goldman Sachs announced Thursday that it has reached an agreement with regulators to pay out more than $5 billion to resolve an investigation related to mortgage-backed securities sold prior to the financial crisis.
The bank said the settlement would resolve potential litigation related to securities packed and sold by the bank from 2005 to 2007 that might have been launched by the Department of Justice, the New York and Illinois attorneys general, the National Credit Union Administration and the Federal Home Loan Banks of Chicago and Seattle.
“We are pleased to have reached an agreement in principle to resolve these matters,” Goldman Sachs CEO Lloyd Blankfein said.
The Justice Department declined to comment on Goldman Sachs’ statement. The NCUA confirmed that it was involved the agreement, but provided no further details.
The settlement would take the form of a $2.385 billion civil monetary penalty and $875 million in unspecified cash payments and would provide $1.8 billion in consumer relief, according to the bank.
The settlement, which was struck only in principle and still needs to be finalized on paper, is meant to end the investigation by the Residential Mortgage-Backed Securities Working Group, the group of U.S. attorneys offices and state attorneys general created in 2012 to investigate fraud related to the subprime crisis.
Goldman Sachs previously settled a separate mortgage-backed securities suit from the Federal Housing Finance Administration over financial products sold to Fannie Mae and Freddie Mac in the lead-up to the crisis. That resolution cost the bank more than $3 billion.
