Goldman pays tip jar-sized settlement
Today, Massachusetts announced a settlement with Goldman Sachs over Goldman’s involvement in the subprime loan business. The bank will give $10 million to the state and up to $50 million to homeowners. All totaled, that equals about a day’s worth of revenue for Goldman during the mortgage boom.
Goldman Sachs’ mortgage business is part of its fixed-income, currencies and commodities unit, the largest source of revenue for the firm. The division produced a record $16.2 billion in revenue in 2007 and helped the securities firm set a Wall Street pay record. Chief Executive Officer Lloyd Blankfein was awarded $68.5 million in pay for 2007 and each of his two co-presidents also received more than $65 million that year.
Even though it’s not much money to Goldman, it’s something when most of the money has been going the wrong way. I don’t know if this is the right way, though, because homeowners were at fault here too, and I don’t know which homeowners will benefit and how they will determine that.
Goldman wasn’t the biggest player in subprime loans, but this is the first settlement of its kind. Massachusetts is planning to announce settlements with other banks as well.
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