Goldman Sachs has hit a snag in its efforts to win government approval to pay back a $5 billion investment from Warren Buffett's Berkshire Hathaway, the Wall Street Journal reported, citing people familiar with the matter.

Goldman formally sought permission from the Federal Reserve for the proposed transaction in late October, in part because Goldman has emerged from the financial crisis with a comfortable cushion to absorb losses, the report said.

Berkshire's cash investment in 2008 was seen as a crucial vote of confidence for Goldman at a time when most investors were keen on dumping banking stocks. But it has also cost Goldman about $1 billion in dividend payments so far, according to the report.

The Fed must approve the transaction because it is Goldman's banking supervisor.

Goldman officials hoped to win clearance quickly, but the request has been caught up in the wider process of setting a dividend-increase policy for all U.S. banks overseen by the Fed, according to the report.

The Fed may be reluctant to give Goldman a go-ahead to make adjustments to its capital level before other banks get the same flexibility, the report said.

Goldman has the option to redeem the preferred shares held by Berkshire at any time for $5.5 billion, subject to Fed approval, though the move would trigger a charge of $1.6 billion, the report said.

Representatives for Goldman Sachs and the Federal Reserve could not be reached outside U.S. business hours.