As part of the settlement, Goldman Sachs agreed to pay
The approximate value of the settlement represents between 10%-11% of the original face value of affected mortgage-backed securities, which is roughly in line with other institutions that have recently settled. Goldman Sachs has already largely reserved for this payment. The FHFA settlement puts a key source of legal uncertainty behind Goldman Sachs.
Sixteen of the FHFA's suits against large financial institutions have now been settled, with three cases remaining. Fannie Mae and Freddie Mac have booked sizable litigation gains related to the FHFA suits in second-half 2013 and year-to-date 2014. The gains are effectively remitted to the U.S. Treasury under the terms of the net worth sweep agreement between Treasury and GSEs.
Additional information is available at www.fitchratings.com.
Global Financial Institutions Rating Criteria (
Peer Review: Global Trading and Universal Banks (
Peer Review: Global Trading and Universal Banks
Global Financial Institutions Rating Criteria
Source: Fitch Ratings
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