Bank of America is headed toward the biggest settlement to arise from the 2008 financial crash, a deal with the Justice Department reportedly worth $16 billion to $17 billion over its role in the sale of mortgage-backed securities, a source directly familiar with the matter tells the AP. The tentative deal—reportedly struck after a conversation last week between Attorney General Eric Holder and Bank of America CEO Brian Moynihan—calls for the bank to pay roughly $9 billion in cash and for the remaining sum to go toward consumer relief. It would also be the "largest single federal settlement in the history of corporate America," adds the New York Times.
The settlement would follow agreements reached over the last year with Citigroup and JPMorgan Chase, worth $7 billion and $13 billion, respectively, to offer financial relief to homeowners whose mortgages were bundled into securities and then sold to investors. The securities contained residential mortgages from borrowers who were unlikely to be able to repay their loans, yet were publicly promoted as relatively safe investments until the housing market collapsed. Consumer groups have criticized past settlements for being soft on the banks, noting that top executives have yet to face criminal charges. A Bank of America spokesman declined comment on the agreement, whose details were first reported yesterday by the Wall Street Journal. (More Bank of America stories.)
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