NEW YORK, Jan. 15 (UPI) -- Investment banker Goldman Sachs Group Inc. said it will settle a government probe into its mortgage-backed securities sales for $5.1 billion.
It announced in a statement Thursday the proposed agreement will resolve potential claims by the U.S. Department of Justice, the attorneys general of Illinois and New York, and a conservator for several failed credit unions related to the sale of bonds, backed by subprime residential mortgages, from 2005 and 2007.
The misrepresentation of the quality of the mortgages in the sale of the bonds helped propel the United States into recession with the 2008 financial crisis.
The proposed agreement will reduce Goldman Sachs' fourth-quarter earnings by about $1.5 billion, and is the government's latest effort to hold Wall Street accountable for the crisis.
The three largest U.S. banks -- JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. -- have already been penalized $37 billion in cash and customer relief. Critics of the government's approach note no individuals have been prosecuted, and that allowing banks to pay penalties merely allows them to consider fines part of the cost of doing business.