Bank of America will pay just under $17 billion

WASHINGTON — The Justice Department and Bank of America have reached a record settlement in principle in which the bank will pay just under $17 billion to resolve allegations related to fraudulent marketing of mortgage-backed securities that helped cause the nation's economic crisis, an official with knowledge of the negotiations said Wednesday.
The tentative deal, reached last Wednesday night during a telephone conversation between Attorney General Eric Holder and Brian Moynihan, the bank's chief executive, surpasses a similar $13 billion settlement with JPMorgan last November, said the official who is not authorized to comment publicly.

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Last week's telephone call, the official said, came as Justice officials in New Jersey were preparing to file a complaint against Merrill Lynch, a part of Bank of America. The official said the bank then requested the call and later raised its offer to reach a tentative settlement.
Although there is an agreement in principle on the value of the deal, the official said other issues have yet to be resolved, and it could be days before there is any public announcement.
A second government official briefed on the negotiations said the settlement is expected to include "hundreds of millions" of dollars in consumer relief to help struggling homeowners in several states cope with their mortgages. The official was also not authorized to speak publicly because the negotiations are confidential.

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A critic of past settlements between banks and the Justice Department questioned whether this one will go far enough.
"The DOJ can be counted on to brag that the settlement dollar amount with Bank of America sets yet another record and claim, again, that this shows DOJ is tough on Wall Street," said Dennis Kelleher, president and CEO of Better Markets, a financial watchdog group. "But, unlike other recent settlements, will DOJ provide the public with the key information on investor losses, Bank of America profits, the names of involved executives, specific laws broken and the actual systemic illegal schemes and activities? In short, is DOJ willing to actually inform the American people about such important and grave matters?"



Ty Laffoon