Goldman’s Q4 profits hit by $5.1bn MBS settlement

Goldman Sachs reached an agreement for a $5.1bn (€4.68bn) settlement over mis-selling mortgage backed securities prior to the 2008 financial crisis.

The US lender is among several banks, including Morgan Stanley and JP Morgan Chase which have been accused of violating regulation with regard to their securitisation, underwriting and sale of residential mortgage-backed securities from 2005 to 2007.

Under the agreement in principle reached with the US 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, Goldman Sachs will pay a $2.385bn (€2.19bn) civil monetary penalty, make $875m (€802.9m) in cash payments and provide $1.8bn (€1.6bn) in consumer relief.

The MBS settlement comes just a week ahead of Goldman Sachs announcing its earnings for the fourth quarter of 2015, analysts already anticipated a decline of earnings compared to the previous year. However, the current settlement will wipe off most of its quarterly earnings.

Mona Dohle
Mona Dohle speaks German and Dutch and is DACH & Benelux Correspondent for InvestmentEurope.

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