Goldman Sachs is the final U.S. bank to reach a subprime mortgage settlement with a national working group established in 2012 to investigate how Wall Street had inflated the mortgage bubble, which led to the economic crisis. The group included several federal regulators and state attorneys general.
Goldman’s $5.1 billion settlement is less than those of the other mortgage giants. JPMorgan Chase paid $13.3 billion, while Bank of America paid $16.6 billion. Morgan Stanley paid $3.2 billion to the working group, which consists of National Credit Union Administration, the Federal Home Loan Banks, and the states of California, Illinois and New York.
However, there is another side to this story. Concealed in the fine print are provisions that allow Goldman Sachs to pay hundreds of millions of dollars less — perhaps as much as $1 billion less — than the headline figure. And that is before the tax benefits of the deal are included. The bank will be able to reduce its bill substantially through a combination of government incentives and tax credits. For all the banks, the credits suggest that the amounts that the banks will have to actually spend on consumer relief will be much lower than the headline figures.
When asked about these differences, the Justice Department official said that the wrongdoing the banks were accused of was different and, as a result, the negotiations took different courses.
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