By Nathaniel Popper, New York Times

State and federal officials said Monday Goldman Sachs would pay $5.1 billion to settle accusations of wrongdoing before the financial crisis.

But that is just on paper. Buried in the fine print are provisions that allow Goldman to pay hundreds of millions of dollars less — perhaps as much as $1 billion less — than that 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 example, the settlement calls for Goldman to spend $240 million on affordable housing. But a chart attached to the settlement explains that the bank will have to pay at most only 30 percent of that money to fulfill the deal. That is because it will receive a particularly large credit for each dollar it spends on affordable housing.

Goldman is the last of the major banks to settle with the government. Past deals with other banks also contained some of these concessions, but Goldman appears to have negotiated an even sweeter deal. 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 numbers announced in the news releases.

“They appear to have grossly inflated the settlement amount for PR purposes to mislead the public, while in the fine print, enabling Goldman Sachs to pay 50 to 75 percent less,” said Dennis Kelleher, the founder of the advocacy organization Better Markets, referring to the government announcement. “The problem all along, with all of these settlements — and this one highlights it even more — is that they are carefully crafted more to conceal than reveal to the American public what really happened here — and what the so-called penalty is.”

A Justice Department official with direct knowledge of the negotiations, who spoke on the condition that his name not be disclosed, said that the banks were given extra credit for activities that the government wanted to encourage, like funding development of low-income housing or providing relief to areas hit by natural disasters. But he also said that the final terms were a result of a back-and-forth between the banks and government officials.

Goldman is the last of the big U.S. banks to reach a settlement with the national working group that was set up in 2012 to investigate how Wall Street exacerbated the mortgage bubble and ensuing financial crisis. The group included several federal regulators and state attorneys general.

The final bill for Goldman is less than the settlements of mortgage giants like JPMorgan, which the government said was paying $13.3 billion, but more than the $3.2 billion settlement the government secured with Goldman’s closest competitor, Morgan Stanley.

In the previous settlements, the banks were also given discounts by federal authorities on various elements of what they owed. But on a number of fronts, Goldman appears to have negotiated a better deal for itself than other banks.

JPMorgan Chase, for instance, earned a $1.15 credit toward its settlement requirements for each dollar of loan forgiveness it offered within the first year, according to the settlement it completed in 2013. Goldman, in contrast, is getting $1.50 of credit for each dollar of loan forgiveness within the first six months after the settlement — an additional incentive that JPMorgan did not receive. JPMorgan also did not get the 70 percent discount on money going to affordable housing.

When asked about these differences, the Justice Department official said that the wrongdoing that the banks were accused of was different and, as a result, the negotiations took different courses.

Like other banks, Goldman purchased loans that had been issued by subprime mortgage specialists like Countrywide Financial. Goldman then packaged these loans into bonds that were able to get the highest rating from credit rating agencies. The loans were sold to investors, who sustained losses when the loans went sour.

Over the course of 2006, Goldman employees took note of the decreasing quality of loans that it was buying, according to a statement of fact released along with the settlement. When an outside analyst wrote a positive report about Countrywide’s stock in April 2006, the head of due diligence at Goldman wrote in an email: “If they only knew.”

Despite the worrying signs, Goldman did not alert investors who were buying the bonds it was packaging, officials said Monday.

“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” Stuart F. Delery, the acting associate attorney general, said in a statement.

Goldman said in a statement: “We are pleased to put these legacy matters behind us. Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients and ensure our governance processes are robust.”

Nearly half of Goldman’s settlement — $2.4 billion — will be paid in a civil penalty. Most of the rest will go to provide relief to consumers who were hurt by the financial crisis.

It is in the consumer relief that Goldman will be able to push down what it ultimately pays for the settlement.

On the broadest level, any money that Goldman spends on consumer relief will be deductible from its corporate tax bill. If Goldman spends $2.5 billion on consumer relief, and pays the maximum U.S. corporate tax rate of 35 percent, it could, in theory, reap $875 million in tax savings.

But Goldman could easily pay less than $2.5 billion in consumer relief because of the sections of the settlement that give it extra credit for certain types of activity.

For every $1 that the bank spends on affordable housing developments, the bank will get a $3.25 credit toward the $240 million, with the possibility of getting 15 percent more credit if it pays early.

Eric T. Schneiderman, the New York attorney general, announced that Goldman would pay $280 million for community reinvestment and neighborhood stabilization in New York. But an annex to the agreement with New York explains that Goldman will get $2 of credit for every dollar it spends in this area, meaning that it will ultimately have to pay only $140 million to meet the terms of the deal.

In sum, the details in the various annexes suggest that Goldman could end up paying over $1 billion less than the $5 billion than was announced on Monday.

In January, Goldman said that it put aside $3.4 billion in 2015 to cover the costs of the $5 billion settlement.

To Learn More:

The Truth of the Goldman Sachs Settlement Is In the Fine Print (by Alan Pyke, ThinkProgress)

Banks Say “Thanks for the Bailout,” Now We’ll Park our Profits in Overseas Tax Havens (by Steve Straehley, AllGov)

Goldman Sachs and Shell “Win” Public Shame Awards (by David Wallechinsky and Noel Brinkerhoff, AllGov)

Goldman Sachs and JPMorgan Chase Slapped Lightly on Corporate Wrists for Financial Malfeasance (by Noel Brinkerhoff, AllGov)

Goldman Sachs Agrees to Pay Largest Bank Fine in History…and Makes it Back in a Day (by Noel Brinkerhoff and David Wallechinsky, AllGov)