The Federal Home Loan Bank of New York agreed to pay $70 million to the bankruptcy estate of Lehman Brothers to settle charges that the bank undervalued interest rate swaps it held with Lehman as the company collapsed in 2008.

FHLBNY announced the settlement in a brief filing with the Securities and Exchange Commission. The filing states:

On April 11, 2017, the Federal Home Loan Bank of New York ("Bank") reached an agreement in principle to settle all claims pending in the United States Bankruptcy Court for the Southern District of New York in the case relating to the 2008 Lehman Brothers bankruptcy entitled Lehman Brothers Holdings Inc. v. Federal Home Loan Bank of New York (Adv. Pro. No. 15-01110). The settlement provides that the Bank will pay $70 million to the Lehman bankruptcy estate.

The Bank believes the settlement is in the best interest of itself and its members, as it will remove the uncertainty presented by this litigation. The Bank has sufficient retained earnings to cover the settlement.

That’s the filing in full, but an article from the Wall Street Journal provides more details on what led to the settlement.

Here’s a summary, from the WSJ:

Lehman and its Special Financing unit sued FHLBNY in 2015 for more than $150 million it said it was owed from its position on 356 swaps and options transactions. Lehman said it was in the money on the swaps at the time of its 2008 bankruptcy filing.

The bank used the swaps with Lehman as a hedge against rising interest rates with the bank paying a fixed rate to Lehman and the investment bank paying a floating rate. If rates fell, Lehman was in the money.

Lehman’s chapter 11 filing on the morning of Sept. 15, 2008, froze financial markets and constituted an “event of default” that triggered the termination of millions of derivatives transactions involving the investment bank. Three days later on Sept. 18, FHLBNY terminated its swaps with a notional amount of $16.5 billion with the bankrupt investment bank.

Because of fluctuations in interest-rates markets after Lehman filed for bankruptcy, FHLBNY went back and “cherry picked” other termination dates, Lehman’s lawsuit alleged, leading the bank “to massively understate” what it owed Lehman.

Now, after nearly two years of legal wrangling and nearly 10 years after the fact, FHLBNY will pay $70 million to Lehman.

For more on the settlement from the WSJ, click here or below.