BofA Hit With $16.65 Billion Settlement
HandelontheLaw.com Staff Writer
Bank of America has agreed to pay $16.65 billion to settle more than a dozen investigations into fraudulent sales of mortgage-backed securities from approximately 2004 – 2008. This highest settlement ever made between the United States and a company at least partially stems from B of A’s acquisition of Countrywide Financial and Merrill Lynch in 2008. The 3 companies combined issued mortgage-backed securities to the tune of $965 Billion from 2004 – 2008. Touted as comparatively safe investments, the bundled securities included residential mortgages securing loans unlikely to be repaid. As we know, a huge financial crisis ensued, including the housing market collapse and the loss of hundreds of billions of dollars by investors.
The settlement, to be publicly announced on August 21, 2014 at the earliest, was negotiated in the country’s behalf by a joint force of state and federal authorities. It consists of $9.65 Billion in cash and $7 Billion in consumer relief pledged by B of A. $1 Billion of the settlement will supposedly be divided by the investigating states of New York, California, Illinois, Delaware, Maryland and Kentucky.
Even before the settlement was publicly announced, it was severely criticized: the settlement statement outlines B of A’s wrongful acts in only the broadest terms, leaving defrauded investors with little-to-no help in possible lawsuits against B of A; and no B of A officers will face charges. Better Markets, Inc., a non-profit, non-partisan, independent organization advocating genuine, lasting financial reform, has already sued the Department of Justice (DOJ) for the J. P. Morgan Chase & Co. settlement and strongly disparaged the DOJ’s Citigroup settlement. Now the Better Markets, Inc. President/CEO asks, “[U]nlike 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?” Considering the anticipated statement of settlement, it appears that the Department of Justice has no intention of providing detailed information on losses, profits, executives, specific crimes or any systematic schemes by B of A to defraud investors.
For good or ill, the Department of Justice and other authorities are wrapping up multiple investigations and actions through this settlement, and the DOJ is now poised to investigate the misconduct of other banks, such as Wells Fargo.
By Kathy Catanzarite
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