Bank of America braced for record $17bn settlement over mortgage mis-selling claims
The deal with the US Department of Justice dwarfs those reached by Citigroup and JPMorgan Chase
Thursday 21 August 2014
Bank of America was today poised to agree a record $17 billion (£10.25 billion) deal with US regulators over the mis-selling of mortgage-backed bonds ahead of the financial crisis.
The settlement was reached through a joint federal and state working committee of regulators set up two years ago. It includes representatives from New York, California and New Jersey.
It is expected that $9.7 billion of the deal will be in the form of cash payments or fines with a further $7 billion in so-called “consumer relief” which includes things such as reducing the balance of borrowers’ mortgages.
The deal also requires Bank of America to acknowledge that it made serious misrepresentations about the quality of residential, mortgage-backed securities issued by itself and by Countrywide Financial and Merrill Lynch. These were two firms bought or bailed out by the bank at the height of the 2008 financial crisis.
Bank of America declined to comment ahead of the DoJ announcement. Under chief executive Brian Moynihan, it has already tallied up almost $55 billion of charges relating to mortgages, almost all of which were due to Countrywide.
Former Countrywide executives, including co-founder Angelo Mozilo, face the likelihood of individual civil suits against them by US prosecutors, according to reports today.
Bank of America’s $4 billion takeover of Countrywide in 2008 is widely seen as the worst acquisition ever, having cost it more than 10 times the purchase price in losses and legal settlements. In March it paid $9.5 billion to settle Federal Housing Finance Agency claims.
- 1 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 2 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
- 5 UK weather: Britain braced for snow as arctic air mass moves in
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Ian Brady: Moors murderer announces his support for Ukip and the SNP
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
UK weather: Britain braced for snow as arctic air mass moves in
Bali Nine executions in Indonesia: Death row British grandmother Lindsay Sandiford says she 'just wants to get it over with'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...