By John Lounsbury
The Financial Times is reporting that Bank of America has agreed with the U.S. Department of Justice (DOJ) to pay more than $16 billion to settle charges of "misselling mortgage-backed securities". The deal will include "around $9 billion in cash" paid to the government and "$7 billion in consumer relief". The details of the consumer relief and the wording of the statements to be officially made by Bank of America remain to be finalized. This agreement follows an assessment of $1.3 billion last week in another case brought by the FHFA (Federal Housing Finance Authority). That was on top of a previous award of $9.5 billion in the same case.
In July The Wall Street Journal had reported that Bank of America was holding out for a $13 billion ceiling on the settlement. But the higher figure was agreed to after U.S. Attorney General Eric Holder told BofA CEO Brian Moynihan in a telephone conversation that the DOJ was about to file a lawsuit for damages.
If the settlement is finalized as reported, it will eclipse the $13 billion settlement between the DOJ and JP Morgan in 2013 to become a new record settlement amount for mortgage fraud, or any banking misdeed for that matter.
This brings the total is fraud settlements paid by banks so far this year to more than $53 billion, an amount larger than the total for all of 2013. GEI reader Rob Carter has provided a list showing that bank settlements as of July for all of the years following the Great Financial crisis have exceeded $200 billion. Econintersect has not independently verified the numbers. http://econintersect.com/b2evolution/blog1.php/2014/08/07/bank-of-america-another-day-another-16-billion