Goldman Sachs Group Inc said on Thursday it is to pay about US$5 billion to settle federal and state probes of its role in the sale of shoddy mortgages in the years leading to the housing bubble and subsequent financial crisis.
Coming nearly eight years after the crisis, the settlement is by far the largest the investment bank has reached related to its role in the meltdown, but the payment is dwarfed by those made by some of its Wall Street counterparts.
Goldman is to pay US$2.39 billion in civil monetary penalties, US$875 million in cash payments and provide US$1.8 billion in consumer relief in the form of mortgage forgiveness and refinancing.
Photo: AP
The US Department of Justice, the attorneys general of Illinois and New York, and other regulators who are part of the settlement have not officially signed off on the deal, which could take some time.
The government agencies are part of a joint state-federal task force created by US President Barack Obama after the 2008 financial crisis that has extracted some of the largest settlements out of Wall Street.
Goldman Sachs, like other Wall Street banks, has been under investigation for allegedly misleading investors on the safety of the securities they created by bundling and selling mortgages.
Many of those poorly written mortgages went bad, triggering the financial crisis that spawned the a recession and the multibillion government bailouts that caused so much political anger.
“We are pleased to have reached an agreement in principle to resolve these matters,” Goldman Sachs chairman and chief executive Lloyd Blankfein said in a statement.
As a result of the settlement, Goldman said its fourth-quarter earnings would be reduced by US$1.5 billion. The firm earned US$1.33 billion in the third quarter.
A Department of Justice spokesman declined to comment on Goldman’s announcement.
Goldman has been one of the last banks to settle with regulators for its role in the financial crisis. Bank of America, JPMorgan Chase & Co and others reached larger, more substantial settlements in 2014 and last year.
Bank of America individually has paid out tens of billions of US dollars in fines as a result of its role in the housing crisis. When JPMorgan reached a similar settlement with the same task force, it paid out US$13 billion.
AI TALENT: No financial details were released about the deal, in which top Groq executives, including its CEO, would join Nvidia to help advance the technology Nvidia Corp has agreed to a licensing deal with artificial intelligence (AI) start-up Groq, furthering its investments in companies connected to the AI boom and gaining the right to add a new type of technology to its products. The world’s largest publicly traded company has paid for the right to use Groq’s technology and is to integrate its chip design into future products. Some of the start-up’s executives are leaving to join Nvidia to help with that effort, the companies said. Groq would continue as an independent company with a new chief executive, it said on Wednesday in a post on its Web
RESPONSE: The Japanese Ministry of Finance might have to intervene in the currency markets should the yen keep weakening toward the 160 level against the US dollar Japan’s chief currency official yesterday sent a warning on recent foreign exchange moves, after the yen weakened against the US dollar following Friday last week’s Bank of Japan (BOJ) decision. “We’re seeing one-directional, sudden moves especially after last week’s monetary policy meeting, so I’m deeply concerned,” Japanese Vice Finance Minister for International Affairs Atsushi Mimura told reporters. “We’d like to take appropriate responses against excessive moves.” The central bank on Friday raised its benchmark interest rate to the highest in 30 years, but Bank of Japan Governor Kazuo Ueda chose to keep his options open rather than bolster the yen,
Even as the US is embarked on a bitter rivalry with China over the deployment of artificial intelligence (AI), Chinese technology is quietly making inroads into the US market. Despite considerable geopolitical tensions, Chinese open-source AI models are winning over a growing number of programmers and companies in the US. These are different from the closed generative AI models that have become household names — ChatGPT-maker OpenAI or Google’s Gemini — whose inner workings are fiercely protected. In contrast, “open” models offered by many Chinese rivals, from Alibaba (阿里巴巴) to DeepSeek (深度求索), allow programmers to customize parts of the software to suit their
Global server shipments are expected to surge to 15 million units next year, from 4 million units this year, with artificial intelligence (AI) servers accounting for about 30 percent, driven by massive capital spending by major cloud service providers, the Market Intelligence and Consulting Institute (MIC) said on Thursday last week. Major cloud service providers — including Google’s parent company Alphabet Inc, Microsoft Corp, Amazon.com Inc and Meta Platforms Inc — are projected to budget US$450 million for capital expenditure next year, up from US$400 million this year, MIC ICT [information and communications technology] Industry Research Center director Edward Lin
RSS