Make us your home page
Instagram

Bank of America could pay $17 billion in mortgage securities settlement

Bank of America and the Justice Department have reached a tentative deal that would cost the bank nearly $17 billion to settle an investigation into its sale of toxic mortgage securities in the runup to the financial crisis, according to people briefed on the matter. It is the latest eye-popping rebuke of a giant bank.

The agreement, which is not final and could still fall apart, would represent a record for the government. It would be the largest sum the Justice Department has ever extracted from a single company.

The bank has agreed to pay a roughly $9 billion cash penalty to the U.S. Treasury — last month, Citigroup agreed to pay a $4 billion penalty — while providing the remaining money in the form of relief to struggling homeowners, said the people briefed on the matter, who asked not to be identified by the New York Times. Just a few weeks ago, the bank was offering only $3 billion in cash, a figure that temporarily caused talks to break down.

A breakthrough came last week on a phone call between Attorney General Eric Holder and the bank's chief executive, Brian Moynihan, one of the people said. Earlier in discussions, when the two sides were far apart, the Justice Department turned down a request for Moynihan to meet with Holder.

Despite the huge penalty, critics contend that the government crackdown has amounted to little more than a slap on the wrist. No Bank of America employee will face charges, and the case against the bank is civil, rather than criminal.

The settlement ends months of on-again, off-again negotiations between the Justice Department and Bank of America, which has already paid more than $50 billion to settle lawsuits by private investors and regulators largely related to its Countrywide Financial and Merrill Lynch units.

The deal will bring a measure of closure to the bank as it concludes the largest remaining legal issue from the financial crisis.

During the talks, the bank had argued with federal prosecutors that it should not be penalized for mortgages that Countrywide and Merrill had sold before it agreed to buy those firms in 2008.

But that argument was significantly weakened last Wednesday when Judge Jed Rakoff, of the U.S. District Court in Manhattan, ordered Bank of America to pay $1.3 billion for the sale of defective Countrywide mortgages, calling the scheme a "brazen fraud."

Bank of America could pay $17 billion in mortgage securities settlement 08/06/14 [Last modified: Wednesday, August 6, 2014 8:27pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, New York Times.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Walmart opens first Pinellas County in-house training academy

    Retail

    Seminole — It had all the hallmarks of a typical graduation: robe-clad graduates marching in to Pomp and Circumstance, friends and family packed together under a sweltering tent and a lineup of speakers encouraging the graduates to take charge of their future.

    New Walmart Academy graduates are congratulated Thursday morning by associates during a graduation ceremony at the Walmart store, 10237 Bay Pines Boulevard, St. Petersburg. The Walmart location is one of the company's training academies where managers complete a one week retail course. David Shultz and Richard Sheehan, both from St. Petersburg, get high fives from the crowd.
[SCOTT KEELER   |   Times]

  2. Lawsuit: Florida contractor fakes death to dodge angry homeowners

    Human Interest

    SEMINOLE — For weeks, Glenn Holland, 67, crawled out of bed before the sun rose to look for a dead man.

    Last year Glenn and Judith Holland said they paid a contractor thousands of dollars to renovate their future retirement home in Seminole. But when they tried to move in on Dec. 14, they said the home was in shambles and uninhabitable. They sent a text message to contractor Marc Anthony Perez at 12:36 p.m. looking for answers. Fourteen minutes later, they got back this text: "This is Marc's daughter, dad passed away on the 7th of December in a car accident. Sorry." Turns out Perez was still alive. Now the Hollands are suing him in Pinellas-Pasco circuit court. [LARA CERRI   |   Times]
  3. Owners to level Port Richey flea market but may rebuild

    Public Safety

    PORT RICHEY — The owners of the recently shuttered USA Flea Market have agreed to demolish all structures on the property, leaving open the possibility of rebuilding the weekend shopping attraction, according to Pasco County officials.

    Pasco County officials shut down the USA Flea Market after it received hundreds of citations for health and code violations.
  4. Kimmins Protégé-Mentor Program a crash course on business know-how

    Business

    TAMPA

    Williams Landscape Management Company was founded 30 years ago with one employee.

    Marisela Linares and Jorge Castro listen to speakers during a workshop at the Kimmins Contracting Corporation on Wednesday, June 7, 2017.   Kimmins Contracting Corporation is handling road construction projects Jeff Vinik's company as he remakes the Channel District. To do some outreach, the company is partnering with three minority contractors, but it's a unique partnership with Kimmins not only giving them the opportunity, but taking them through a series of workshops. It's essentially providing training to the subcontractors so they will be in position to get other contracts.
  5. Tampa man pleads guilty to forging check for fake investment

    Personal Finance

    A Tampa resident was convicted Thursday for forging a check for a fake investment. The Florida Office of Financial Regulation said that Eric Franz Peer pleaded guilty. He served 11 months in jail and will have to pay $18,000.