Goldman Sachs to Pay $5Bln to Settle Mortgage-Securities Claims

WASHINGTON (Sputnik) — Payments of fines, consumer relief and cash to resolve liabilities stemming from the sale of mortgage-backed securities will total about $5 billion for Goldman Sachs, according to a tentative settlement with US authorities announced by the company on Thursday.

"We are pleased to have reached an agreement in principle to resolve these matters," Goldman Sachs Chairman Lloyd Blankfein said in a press release announcing the agreement.

Approval by the US Department of Justice and the other applicable governmental authorities will be needed to finalize the deal, according to Goldman Sachs.

Mortgage-backed securities sold by Goldman and other large investment houses are blamed for the US banking emergency that began in 2008 and played a major role in what became known as the Great Recession.

The settlement includes a $2.3 billion civil penalty, plus another $875 million in cash and $1.8 billion in consumer relief, some of it in for homeowners adversely affected by a housing crisis that fuelled the recession.

Goldman Sachs is an investment banking firm known for high-profile government positions obtained by its executives, including US Treasury Secretaries Robert Rubin and Henry Paulson in the administrations of Presidents Bill Clinton and George W. Bush.