Bank Of America To Pay Record $16.65B

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Bank Of America To Pay Record $16.65B

Last Thursday, Bank of America and two of its subsidiaries agreed to settle its case with the U.S. Department of Justice for $16.65 billion. The settlement will put to end claims that the bank engaged in faulty lending during the housing boom years, making it the biggest settlement stemming from the 2008 financial crisis.

The anticipated settlement ends claims pertaining to subprime mortgage practices at Countrywide Financial Corp., a lender acquired by Bank of America during the crisis, and Merrill Lynch, which Bank of America obtained at the government’s urging at the height of the crisis.

In addition to the biggest civil settlement against any single entity in the history of the Justice Department, Bank of America also signed off on a 30-page statement of facts outlining the alleged disclosure and other violations at Countrywide, Merrill Lynch and Bank of America itself.

While the allegations against Bank of America, Countrywide Financial, and Merrill Lynch differ, each involved the entity “saying one thing to investors about the quality of the loans they packaged into RMBS, yet in reality knowing the facts indicated something quite different,” according to Associate Attorney General Tony West. Bank of America, which was not found liable for fraud in the case, had argued that losses to Fannie and Freddie were caused by the broader economic crisis, not by any fraud by Countrywide.

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