Goldman Sachs investigated by FBI

30 January 2008

Goldman Sachs has admitted that it is among the 14 firms being investigated by the FBI due to its involvement in the sub-crime crisis in the US.

The company confirmed in its annual report that it is also facing legal action for its part in providing high-risk loans to homebuyers who could not afford them and packaging them into bonds.

Goldman admitted that is among the 21 Wall Street firms which the city of Cleveland in Ohio is suing for allegedly encouraging mortgage lenders to continue offering unaffordable sub-prime loans by packaging them as bonds.

The Wall Street giant also confessed that it has been asked by industry watchdogs to provide details of sub-prime-related investments, according to the Times.

New York attorney-general Andrew Cuomo is leading one case against Goldman, accusing it of being aware of the high risks of sub-prime mortgage bonds and acting irresponsibly.

Clayton Holdings has agreed to give evidence in the case in exchange for immunity.

Although the FBI has not named the 14 firms it is probing, it is now understood that Goldman is among them.

It has said that it will provide information to the "various governmental agencies and self-regulatory organisations" which have requested it.

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