Goldman Sachs to pay $5.1bn over mortgage bond misselling

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Goldman Sachs has made a $5.1bn (£3.5bn) deal with US regulators over allegations it fraudulently sold mortgage bonds before the financial crash.

The bank says it is set to pay $2.4bn to settle with regulators, plus another $2.67bn to consumers.

Goldman has made the deal in principle with the US Department of Justice’s Financial Fraud Enforcement Task Force.

A Goldman statement says: “The agreement in principle will resolve actual and potential civil claims by the U.S. Department of Justice, the New York and Illinois Attorneys General, the National Credit Union Administration (as conservator for several failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle, relating to the firm’s securitization, underwriting and sale of residential mortgage-backed securities from 2005 to 2007.”

The bank says the deal would cut its income for the fourth quarter of 2015 by around $1.5bn after tax.

Goldman Sachs Group chief executive Lloyd Blankfein says: “We are pleased to have reached an agreement in principle to resolve these matters.”