Home » Ssssh! Goldman Sachs Settles for Over a Billion

Ssssh! Goldman Sachs Settles for Over a Billion

by Bruce Haring

It’s a tactic as old as news – release things you don’t want others to know about late on a Friday or Saturday.

In the old days, it worked because editions were already printed, thereby leaving room only for news inside the publication, where many wouldn’t see it. Today it works because attention spans are diverted toward leisure activities and the news will be pushed far down by the time we start reviewing what happened while we were otherwise appointed.

All of this explains why the news of a $1.2 billion settlement of claims by Goldman Sachs with mortgage twins Fannie Mae and Freddie Mac was released late on Friday.

The banking firm was accused of selling high-risk securities to both Fannie and Freddie between 2005 and 2007. The settlement calls for Goldman Sachs to pay $3.15 billion to Fannie and Freddie to buy back the securities. The difference is what the securities are worth now versus what they once cost.

Of course, if you total up all the bad securities sold back then, it comes to about $196 billion. Many of the banks have settled with Fannie and Freddie rather than continue to fight, but the total recovered to date amounts to $17 billion.

But presumably, Goldman Sachs, Bank of America, JP Morgan, Citigroup and others involved in this have learned their lesson. Which is: the punishment is far less than the crime.


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