California to receive $10M as part of Goldman Sachs fraud case settlement

California to receive $10M as part of Goldman Sachs fraud case settlement

California’s two biggest retirement agencies will receive millions of dollars in civil penalties from Goldman Sachs as part of the investment bank’s settlement with the federal government in a fraud case.

California Public Employees’ Retirement System (CalSTRS) and California State Teachers’ Retirement System (CalPERS) were part of the case that accused Goldman of residential mortgage-backed securities (RMBS) fraud.

Goldman agreed to settle the dispute by paying $5.06 billion, with 17 per cent going to federal and state partners. CalSTRS and CalPERS will receive $10 million.

U.S. Attorney Benjamin B. Wagner, of the Eastern District of California, stressed that Goldman was exploiting the RMBS market, which contributed to the massive international financial crisis in 2008.

Speaking on the topic, Wagner said, “The conduct in this matter, which occurred from late 2005 to 2007, was symptomatic of the recklessness on Wall Street which led to the financial crisis.”

As per a statement by the Department of Justice (DoJ), the National Credit Union Administration will receive $575 million, while the Federal Home Loan Bank of Des Moines, Federal Home Loan Bank of Chicago, and the state bank of New York will receive $37.5 million, $37.5 million and $190 million, respectively. $25 million will go to the state of Illinois.