Mar 17, 2017

Goldman Sachs is on a $4.5 billion housing-bubble debt binge

Since the beginning of last year, Goldman Sachs has been on a mortgage buying spree—gobbling up roughly two-thirds of the delinquent loans auctioned by Fannie Mae during that time, the Wall Street Journal reports.

Here's why: Goldman is buying up these loans in order to satisfy the terms of a settlement reached with state and federal officials in January 2016 for the firm's role in fueling the housing bubble. Goldman must modify $5.1 billion worth of loans by either reducing interest rates, extending maturities, or writing down the values of the mortgages.

Why it matters: These types of settlements are arguably the most significant actions taken by the government to lessen the damage of the housing crisis on homeowners. Financial institutions have agreed to similar settlements totaling $181.1 billion for crisis-related misdeeds.

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