Goldman Sachs to pay US$5b to resolve claims on RMBS sale

[LONDON] Goldman Sachs Group Inc said it will pay US$5.06 billion to resolve civil claims related to the firm's securitization, underwriting and sale of residential mortgage-backed securities from 2005 to 2007.

The agreement with regulators will reduce earnings for the fourth quarter by about US$1.5 billion after tax, Goldman said in a statement. The Wall Street bank, which is expected to report fourth-quarter earnings next week, said it will pay a US$2.385 billion civil monetary penalty, make US$875 million in cash payments and provide US$1.8 billion in consumer relief.

The bank will offer a reduction in unpaid principal for affected homeowners and borrowers, financing for construction and debt support, among other things.

The agreement in principle will resolve actual and potential civil claims by the US Department of Justice, the New York and Illinois Attorneys General, the National Credit Union Administration and the Federal Home Loan Banks of Chicago and Seattle, the company said.

Goldman Sachs' shares were marginally down in extended trading on Thursday.

REUTERS