By Max Clarke
Goldman Sachs (NYSE: GS) is facing enforcement action by the US Federal Reserve Bank to address ‘a pattern of misconduct and negligence’ in its former subsidiary, Litton Loan Servicing LP.
The Manhattan-based investment banking giant sold Litton yesterday (Thursday 1st), though the complaints refer to foreclosure proceedings that were pending in 2009/10. The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process. The foreclosure review will be conducted consistent with the reviews currently underway at the 14 large mortgage servicers that consented to enforcement actions brought by the banking agencies on April 13, 2011.
The Fed have argued that financial sanctions are an appropriate form of redress. These monetary penalties against Goldman Sachs will be in addition to the corrective actions that Goldman Sachs will be taking pursuant to today's action. Goldman Sachs has acknowledged in today's action that it will be responsible for satisfying any civil money penalty that the Board of Governors could have assessed against Litton for its conduct.
Join us on