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Goldman Sachs Nearing $1.1 Billion Settlement With U.S. Housing Regulator

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GOLDMAN SACHS SIGN
A Goldman Sachs Group Inc. logo hangs on the floor of the New York Stock Exchange in New York, U.S., on Wednesday, May 19, 2010. Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm's investment advice fared far worse. Photographer: Daniel Acker/Bloomberg via Getty Images | Bloomberg via Getty Images

Aug 22 (Reuters) - Goldman Sachs Group Inc could pay about $1.1 billion to settle claims from the U.S. housing finance regulator that it sold bad mortgage-backed securities (MBS), the Financial Times reported.

Negotiations between Goldman and the Federal Housing Finance Agency (FHFA) could be concluded as early as next week, the business daily reported, citing people familiar with the matter. (http://on.ft.com/1q2eaOS)

The proposed amount would be almost double of what the Wall Street bank paid to the Securities and Exchange Commission in 2010 over similar issues. (http://reut.rs/1t0fepd)

Goldman and FHFA were not immediately available for comment.

Goldman and Morgan Stanley are also in preliminary discussions with the U.S. Department of Justice about settling allegations that they mis-sold MBS, the British newspaper reported, citing three people with knowledge about the issue.

In its lawsuit, the FHFA said Fannie Mae and Freddie Mac bought $11.1 billion of mortgage-backed securities from Goldman, unaware that "significant percentages of the underlying mortgage loans... had materially poorer credit quality than was represented in the registration statements."

On Thursday, Bank of America Corp reached a $16.65 billion settlement with U.S. regulators to settle charges that it misled investors into buying troubled mortgage-backed securities. (Reporting By Sudarshan Varadhan; Editing by Saumyadeb Chakrabarty)

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