Bank of America Corp. (NYSE: BAC) is nearing a $16 billion to $17 billion settlement with the Justice Department to resolve allegations of mortgage misconduct prior to the financial crisis, according to various reports citing people familiar with the matter.
Bank of America has agreed to pay roughly $9 million in cash to the government, states and other government entities as part of an overall pact that could be finalized this month, reports The Wall Street Journal.
Settlement talks stem from a “night-time” phone call on July 30 between Bank of America President and CEO Brian Moynihan and Attorney General Eric Holder, according to the people familiar with the matter referenced by WSJ.
While the bank had been reluctant to offer more than $13 billion toward the settlement, substantially lower than the $17 billion sought by the Justice Department, it did raise the cash portion of its payment from $4 billion to $7 billion.
“But hours later, Mr. Holder told Mr. Moynihan that if the bank didn’t bring its offer closer to the government’s demand, Justice Department lawyers could file a lawsuit the next day that had been prepared by New Jersey U.S. Attorney Paul Fishman,” said the personnel cited by WSJ.
The latest in a string of ongoing legal actions against Bank of America, the agreement stands to be the largest settlement between a company and the U.S. government—surpassing a $13 billion deal reached last year between the Justice Department and J.P. Morgan Chase & Co. (NYSE: JPM) related to similar allegations of banks knowingly selling shoddy mortgages to investors.
To date, the bank has already doled out nearly $60 billion since the financial crisis to settle lawsuits and buy back mortgage securities—more than any of its rivals, notes WSJ.
Just last week, a New York federal judge ordered Bank of America to pay $1.27 billion in penalties for a lending fraud case perpetuated from 2007 to 2008 by Countrywide Financial, which it acquired after the scheme had ended in 2008.
While both sides continue to further hash out details regarding the settlement, the deal could still fall apart, said one individual close to the matter in the WSJ report.
Read more at The Wall Street Journal.
Written by Jason Oliva