Goldman Sachs Reaches $5B Mortgage Fraud Deal

     MANHATTAN (CN) – Eight years after helping sink the global economy, Goldman Sachs reached a $5 billion settlement Monday that includes programs to help homeowners damaged by their mortgage fraud.
     Complete with a statement of facts describing how Goldman Sachs misled investors, the agreement’s filing today comes after the bank first revealed the deal’s preparation in January financial filings.
     Though the settlement is roughly half of the $10 billion that Goldman Sachs accepted in bailout money from the Troubled Asset Relief Program (TARP), Associate U.S. Attorney General Stuart Delery boasted about the deal in a statement this morning.
     “This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” Delery said.
     Benjamin Mizer, who heads the Justice Department’s civil division, noted that Goldman’s “illegal conduct resulted in the financial crisis of 2008.”
     Many critics have denounced the failure to vigorously prosecute Goldman, a bank memorably described as a “great vampire squid” by Rolling Stone writer Matt Taibbi.
     None of Goldman’s executives have been prosecuted to date in connection with the mortgage-fraud scandal.
     In addition to a penalty of more than $2.3 billion under the Financial Institutions Reform, Recovery and Enforcement Act, today’s settlement includes $1.8 billion for relief to underwater homeowners, distressed borrowers and affected communities.
     New York Attorney General Eric Schneiderman, who led the Residential Mortgage-Backed Securities Working Group convened in 2012, said the Empire State will receive $670 million, including $480 million worth of creditable consumer relief and $190 million in cash.
     These funds will help expand the New York State Mortgage Assistance Program and spur construction of affordable housing, Schneiderman said.
     New York has already received more than $5 billion from the National Mortgage Settlement and Residential Mortgage-Backed Securities Working Group settlements.
     “Since 2012, my No. 1 priority has been getting New Yorkers the resources they need to rebuild,” Schneiderman said in a statement. “These dollars will immediately go to work funding proven programs and services to help New Yorkers keep their homes and rebuild their communities.”
     Schneiderman will hold a press conference on the deal at 1:30 pm.
     State attorneys general from California and Illinois joined Schneiderman and the U.S. Department of Justice this morning in announcing the deal.
     U.S. Sen. Bernie Sanders reacted to the news this morning while addressing a rally in Albany, part of his barnstorming of upstate New York ahead of the state’s April 19 presidential primary.
     “Goldman Sachs is one of the major financial institutions in our country,” Sanders said, according to a press release from his campaign. “What they have just acknowledged to the whole world is that their system … is based on fraud.”
     Team Sanders also featured the deal prominently at the beginning of a new ad that begins with an overhead view of Goldman Sachs’ office in lower Manhattan overlooking the Hudson River.

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