Podcast Center
Video Center
Webcasts
Resource Center
Events
August 21, 2014 at 05:33 AM
Bank of America Corp. will pay $16.65 billion to end federal and state probes into mortgage bond sales, the harshest penalty yet related to loans that fueled the 2008 financial crisis, the Justice Department said.
The settlement, which includes $7 billion in consumer relief and a $5 billion penalty, resolves civil investigations by federal and state prosecutors, the U.S. said today.
Negotiations between the second-largest U.S. lender and the government began in March. They’ve dragged on as prosecutors took a more aggressive stance, seeking to dispel criticism of their efforts to punish misconduct that helped fuel the housing bubble and financial crisis. Talks intensified in late July after the bank acquiesced to demands that it raise its offer, people familiar with the matter have said.
The agreement cements Bank of America’s status as the firm punished hardest for faulty mortgage practices. It eclipses Citigroup Inc.’s $7 billion settlement in July and JPMorgan Chase & Co.’s $13 billion accord in November. Bank of America’s settlement also comes on top of its $9.5 billion deal in March to resolve related Federal Housing Finance Agency claims.
Negotiations Stalled
Under Chief Executive Officer Brian T. Moynihan, Bank of America has already booked more than $55 billion in expenses tied to home loans, mostly linked to the disastrous 2008 takeover of subprime lender Countrywide Financial Corp.
