NO CRIMINAL CHARGES
We've covered the issue extensively. This is why no one goes to prison.
Goldman Sachs will pay $5 billion to settle federal and state probes into the bank's sale of mortgage-backed securities before the financial crisis, the Justice Department announced Monday. Authorities said Goldman misrepresented the quality of loans it securitized and then sold to investors ahead of the housing bubble and 2008 crisis. The settlement includes a $2.4 billion civil penalty, $1.8 billion in relief payouts to underwater homeowners and affected borrowers and $875 million to resolve various other claims.
"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," acting Associate Attorney General Stuart Delery said in a statement.
Authorities said Goldman acknowledged that it received information indicating certain loans did not meet the standards it had described to investors. They also said the bank did not "typically" identify and eliminate loans with credit exceptions.
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Back in 2006, the financial titan Goldman Sachs was preparing to sell a bundle of housing loans it had purchased from the mortgage giant Countrywide. After a Goldman analyst wrote an optimistic assessment of Countrywide's mortgage stock, a company due diligence officer responded with a cryptic email, apparently dissenting from the analyst's view. "If they only knew. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ." he wrote — with 34 ellipses.
What those ellipsis may have been referring to is the fact that Countrywide business model relied upon issuing mortgages to buyers who couldn't afford them, and then selling those mortgages as high-quality investments — a practice that helped precipitate the 2008 financial crisis.
Leading up to the crisis, Goldman Sachs bought up these questionable mortgages and sold them to investors, marketing them as a sound financial product even as its own internal assessments raised concerns. The US Justice Department highlighted that internal Goldman Sachs email on Monday, as it announced a $5.1 billion settlement stemming from Goldman's conduct in the lead up to the financial crisis. The announcement does not include any criminal charges against Goldman executives — rather it asks the firm to pay the equivalent of 70 percent of its quarterly revenue in fines.
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