Goldman Said to Near U.S. Settlement Exceeding $2 BillionTom Schoenberg
Goldman Sachs Group Inc. is in talks to pay $2 billion to $3 billion to settle a probe into its sales of mortgage bonds leading up to the financial crisis, according to a person with direct knowledge of the situation.
The investment bank could reach a deal with the U.S. Justice Department within weeks, the person said, asking not to be identified because the negotiations aren’t public.
The accord is part of a broader push by the government to hold more Wall Street firms to account for the 2008 crisis after authorities pressed the three biggest U.S. banks -- JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. -- to pay a total of more than $35 billion in cash and consumer relief. Morgan Stanley said in February it agreed to pay $2.6 billion to end probes into its creation and sale of mortgage-backed securities. The firm has yet to complete the deal.
Patrick Rodenbush, a Justice Department spokesman, and Tiffany Galvin at New York-based Goldman Sachs declined to comment on settlement talks.
The Wall Street Journal reported earlier Thursday that Goldman Sachs and Morgan Stanley are among banks nearing agreements, as investigators press more than a half-dozen other firms to settle probes for amounts ranging from a few hundred million dollars to a few billion dollars.
Other banks set to settle include Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, UBS Group AG and Wells Fargo & Co., the Journal said.
Representatives of Credit Suisse, HSBC, UBS and Wells Fargo declined to comment on the mortgage probes, while Barclays, Deutsche Bank and RBS didn’t immediately respond to messages.
Talks with Morgan Stanley have been delayed by disagreements over how to describe the firm’s alleged misconduct in settlement documents, according to the person. A spokesman for the bank didn’t respond to a message seeking comment after normal business hours.
Banks and investors around the world suffered billions of dollars in losses as subprime home loans bundled into mortgage-backed securities defaulted, causing the bonds to plummet in value.
Goldman Sachs, like most other big banks, previously disclosed the U.S. inquiries and said it’s cooperating to resolve them. The firm said in February it got a letter from a U.S. Attorney in California, part of a national task force, warning that investigators had found it violated federal law in connection with sales of mortgage-backed securities. The bank said it was given an opportunity to respond.
The investigation is being led by U.S. Attorney Benjamin Wagner, whose office in Sacramento, California, put together the case against JPMorgan two years ago.
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