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.
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.
Semiconductor stocks on Friday took a beating after a grim profit warning from Idaho-based Micron Technology Inc sparked fresh worries about the US’ earnings power as the country is potentially heading for a recession. Despite a broader stock market rally, the Philadelphia Stock Exchange Semiconductor Index dropped 3.8 percent after Micron, the largest maker of memory semiconductors in the US, flagged that demand was cooling for chips used in computers and smartphones. The index — which is home to US chip giants Advanced Micro Devices Inc and Nvidia Corp, as well as Micron — is down 38 percent this year. Historically, semiconductor
WHOLLY OWNED SUBSIDIARY: Costco Wholesale said it expected the purchase of the remaining 45 percent stake to add 1 to 1.5 percent to its earnings per share US-based Costco Wholesale Corp on Thursday said that it had purchased the remaining 45 percent stake in Costco President Taiwan Inc (台灣好市多) for US$1.05 billion, making the local company a fully-owned unit. “We estimate that the purchase would add about 1 to 1.5 percent to [our] earnings per share,” Costco said in a statement. Costco President Taiwan was established as a joint venture with Kaohsiung-based President Group (大統集團), which held a 45 percent stake. Since the first Costco store opened in Kaohsiung in 1997, 14 outlets have been set up in Taiwan, company data showed. PROFITABLE Three Costco stores in Taiwan — in Taipei’s Neihu
MOBILITY SOLUTIONS: Tata Technologies’ participation marks more progress in Hon Hai’s efforts to expand its ecosystem through the platform, the Taiwanese firm said India’s Tata Technologies Ltd has become the latest member of Hon Hai Precision Industry Co’s (鴻海精密) MIH Open Platform to jointly develop sustainable mobility solutions for customers worldwide, the Taiwanese company said yesterday. It might include embedded and electrical, electric platform development and battery management system solutions, among others, Hon Hai said. Tata Technologies’ participation marks more progress in Hon Hai’s efforts to expand its electric-vehicle (EV) ecosystem through the MIH platform, it said. The open platform has about 2,380 members around the world, with an aim to jointly develop EV ecosystems and shrink the time to market for products. Hon Hai made the
SOARING PROFITS: Semiconductors and shipping have knocked automaking and construction out of the 10 highest paying industries, stock exchange data showed Mobile phone chip designer MediaTek Inc (聯發科) posted an average of NT$5.15 million (US$173,249) in annual compensation for non-managerial employees last year, marking the highest among all firms listed on the Taiwan Stock Exchange (TWSE), exchange data showed. That is a 66 percent increase from the company’s average compensation of NT$3.08 million in 2020, as its earnings per share (EPS) expanded from NT$26.01 in 2020 to NT$70.56 last year. That is also three times higher than the average compensation of NT$1.7 million in the nation’s semiconductor industry, the data showed. The increases helped MediaTek advance its ranking from third in 2020, replacing