Goldman Sachs To Pay $5B For Loans That Fueled Financial Collapse

Goldman Sachs will pay more than $5 billion as part of a settlement with the U.S. Justice Department over reckless lending tactics that fueled the financial collapse of 2008, officials announced Monday.

Goldman will pay a total of $2.385 billion as part of a civil penalty and $1.8 billion in relief for homeowners, borrowers and communities, the department said in a press release. The relief will go toward loan forgiveness and affordable housing, the department said.

An additional $875 million will go toward other federal and state claims, according to the department, for a settlement grand total of $5.06 billion.

“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in the release.

Goldman, the massive international investment firm headquartered in New York, sold securities that were backed by mortgages that the company knew would fail, the department said. Investors were misled and lost billions of dollars from those securities, which were issued between 2005 and 2007, the department said.

The settlement is the fifth multibillion-dollar deal struck with banks and other financial institutions in connection with the 2008 crash.

“They knowingly put investors at risk and in so doing contributed significantly to the financial crisis," Rene Febles, a federal housing official, said in the release. "The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit."

As part of the settlement, federal authorities can still bring criminal or more civil charges against Goldman or anyone involved in the scheme.

This is a developing story. Refresh this page for updates as they become available.