Goldman Sachs has finally agreed to pay the government a record $3.15 billion in exchange for the dropping of charges brought by federal authorities related to the financial crisis.

The New York Times reported on Friday that the bank will be buying back mortgage bonds it sold before the financial crisis began. These were sold to mortgage companies Fannie Mae and Freddie Mac despite knowing of their poor quality. The Federal Housing Finance Agency, regulator of the two mortgage companies, will in turn abandon its cases against Goldman, which will pay $1.2 billion more than the bonds are now worth. The amount is also regarded as the highest bill for a case related to the financial crisis.

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The New York Times said Goldman has held out longer compared with the other banks slapped with similar cases by the housing agency, which had opted for earlier settlements. It said Goldman had been firm as late as last month that the cases against it should be dismissed.The housing agency still has lawsuits pending against HSBC, Nomura, and Royal Bank of Scotland.

Its stubbornness carried a huge cost since Goldman was able to settle a similar case in 2010 for $550 million. The New York Times noted that Goldman has been largely successful in avoiding heavy fines that other banks suffered for wrongdoings committed before the 2008 crisis.

Earlier this week, the Bank of America paid $16.65 billion to settle a case filed by the Justice Department for its handling of shoddy mortgages. Bank of America also had to pay a separate $9.5 billion to settle the case against the housing finance agency's lawsuit, which were used to bay back mortgage bonds and for fines

The report said Goldman has paid lower fines since it did not create subprime loans. However, it did buy subprime mortgages, which it bundled into bonds and sold to investors, such as Freddie Mac and Fannie Mae

Goldman previously said that it had thoroughly reviewed the mortgages included in the bonds, but government lawyers refuted this last month and showed that the bank was aware it was selling shoddy goods, but did not warn buyers and even placed bets against those bonds

The New York Times noted that if the case had gone to trial in September, Goldman would have faced the prospect of government lawyers bringing up unpleasant history.

The bank said on Friday it had already put aside enough money to cover the costs involved in the new settlement. The report added that Goldman may even offset the cost of the settlement by holding onto the bonds until their values increase before unloading those.

The New York Times said that Goldman is not yet out of the woods with the Justice Department, the agency that have squeezed the highest penalties in crisis era penalties, in the process of negotiating settlement with Goldman.

TagsGoldman sachs, financial crisis