Federal prosecutors in Sacramento have helped bring about a $5 billion settlement with Goldman Sachs over the sale of shoddy mortgages.
The deal with Goldman Sachs resulted from investigations into the sale of sloppy mortgages that were issued in the Sacramento region before the housing bubble and economic meltdown.
"So much of the pain of the financial downturn was experienced here in the Central Valley," says Benjamin Wagner, the U.S. Attorney for the Eastern District of California based in Sacramento.
He says two assistant U.S. attorneys in his office led the investigation.
"They found that Goldman Sachs knew a fair amount about the poor quality of some of these loans, that they failed to conduct random sampling of the loans that they were looking at," Wagner says.
Under the settlement, Goldman Sachs will pay a nearly $2.5 billion civil penalty and an additional $1.8 billion in relief to underwater homeowners and distressed borrowers. The agreement is the latest multi-billion dollar civil settlement reached with a major bank, including settlements with Bank of America and Citigroup.