Goldman Sachs has agreed to pay $3.15 billion to resolve claims that it misled U.S. mortgage giants Fannie Mae and Freddie Mac about risky mortgage securities it sold them before the housing market collapsed in 2007.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, announced the settlement Friday with the Wall Street powerhouse.
While Goldman is paying $3.15 billion to buy back the securities from Fannie and Freddie, the FHFA said the settlement was worth $1.2 billion because of the difference between what Goldman is paying and the current value of the securities.
“We are pleased to have resolved these matters,” Goldman Sachs Group general counsel executive Gregory Palm said in a statement.
The settlement is the latest federal government settlement over actions related to the financial crisis that struck in 2008. The government rescued Fannie and Freddie at the height of the crisis in September 2008 when both were on the verge of collapse. The companies received taxpayer aid totaling $187 billion. They have since become profitable and repaid the full bailouts.
The FHFA sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. The total for the securities sold was $196 billion.
Goldman will pay about $1 billion to Fannie and $2.15 billion to Freddie for the securities it sold. The bank’s cost could be lower than $1.2 billion if it’s able to sell the securities at a higher price than their current value.
Other banks have opted for a cash payment to settle claims against them.
— Associated Press
Argentina on Friday accused the U.S. judge who called the country’s new debt restructuring plan illegal of making “imperialist” comments against the South American nation.
Latin America’s No. 3 economy tipped into its second default in 12 years during July after U.S. District Judge Thomas Griesa blocked payments to holders of debt issued under U.S. law that was restructured following Argentina’s record $100 billion default in 2002.
Griesa ruled that measures proposed by Argentina’s president late Tuesday to make debt payments locally and push bondholders to bring their debt under Argentine law violated past court rulings. But he stopped short of holding the country in contempt.
President Cristina Fernandez’s measures, if enacted and executed, would potentially allow Argentina to skirt Griesa’s court orders and resume interest payments on an estimated $29 billion in restructured bonds.
Argentine Cabinet Chief Jorge Capitanich said Griesa’s choice of words was “unfortunate, incorrect and even, I would say, imperialist expressions.”
Argentina defaulted after Griesa froze a $539 million interest payment, saying restructured bonds cannot be paid unless U.S. investment funds demanding 100 cents on the dollar, plus interest, are simultaneously paid.
● Model aircraft hobbyists, research universities and commercial drone interests filed lawsuits challenging a government directive that they say imposes tough new limits on the use of model aircraft and broadens the agency’s ban on commercial drone flights. The three lawsuits asked the U.S. Court of Appeals for the District of Columbia Circuit to review the validity of the directive, which the Federal Aviation Administration issued in June. The agency said the directive is an attempt to clarify what is a model aircraft and the limitations on the crafts’ operation.
● McDonald’s is replacing its U.S. president for the second time in two years, a move that suggests pressure on chief executive Don Thompson to improve sales in the fast food chain’s home market. The company named former McDonald’s executive Mike Andres as president of McDonald’s USA, replacing Jeff Stratton, 58, who had been in the job since December 2012. McDonald’s said Stratton is retiring.●
● Delta Air Lines plans to hire at least 1,800 flight attendants and began taking applications for the positions this week, after opening them to internal candidates last week. “We anticipate 2015 to be another big year for flight attendant hiring and pilot hiring due to our expected growth,” said Delta chief executive Richard Anderson in a message to employees this week. During one round of flight attendant hiring in recent years, Delta received more than 100,000 applications. ●
— From news services
● Monday: New home sales for July released at 10 a.m.