Bank of America’s big fine
You’d be forgiven for thinking that Bank of America settles crisis-era mortgage cases with the U.S. government once a week or so. But the one this week, at $16.65 billion, is the big one. That is, it’s the biggest settlement to date, eclipsing not only previous settlements by the bank (which now come to a total of about $65 billion), but also all of the similar settlements reached by other banks. JP Morgan paid $13 billion and Citigroup $7 billion recently for similar reasons. The bank will pay “$9.65 billion in cash to resolve more than a dozen federal and state investigations, and provide $7 billion in help to struggling homeowners and communities,” according to Reuters.
Here’s our updated chart of the biggest bank settlements in history:
No individuals were charged, but Bank of America has admitted to some of its terrible pre- and post-crisis behavior. There are, as usual, some embarrassing emails involved. Here are some details from the Reuters story:
Under the out-of-court settlement, Bank of America acknowledged that Merrill Lynch told investors in subprime mortgage bonds in 2006 and 2007 that the loans generally complied with underwriting guidelines, though reviews suggested as many as 50 percent did not.
A statement of facts cites one email in which a Merrill employee wrote: “(h)ow much time do you want me to spend looking at these (loans) if (the co-head of Merrill Lynch’s RMBS business) is going to keep them regardless of issues?”
Bank of America also acknowledged that Countrywide did not generally tell investors the extent to which it made exceptions to its own internal guidelines.
The settlement also covered some post-crisis conduct, including Bank of America’s admission that from 2009 to 2012 it submitted loans for government insurance under the Federal Housing Administration that did not qualify.