A yearly regulatory filing by Bank of America Corp yesterday revealed that the second-biggest lender in the US has yet to recover from the 2008 financial crisis fallout, Bloomberg said. According to the filing, BofA said there are new investigations launched on its mortgage and foreign-exchange businesses, which would partly be the reason why it also has to increase its legal cost allocations by 20% to $6.1 billion. The litigation expenses are not covered by the bank's reserves as of December 31, 2012.
Since his predecessor acquired Countrywide Financial Corp. and Merrill Lynch & Co in 2008, Chief Executive Officer Brian Moynihan is struggling to all probes and claims lodged against the bank. Bloomberg said the efforts have cost the bank over $50 billion, with majority of the sum tied to faulty home loans, servicing and foreclosures which the bank had inherited from Countrywide.
The filing said that the latest investigation development involved the loans backed by the Federal Housing Administration. The unit that handles such loans is being investigated by the US Attorney's Office in Brooklyn, New York for compliance, according to an unnamed source. Bloomberg said the prove follows the $1 billion settlement the bank had entered for FHA-backed loans originated by Countrywide in 2012. The US government said Countrywide knowingly issued FHA-insured loans to home buyers who were not qualified.
BofA also said in the filing that the governments in North America, Europe and Asia are looking into the bank and other participants regarding conduct in foreign-exchange markets in the last several years. BofA has said in the filing that it is currently cooperating with the authorities regarding the government probes.
Bloomberg said that around 20 bank employees worldwide had been put on leave, suspended or fired since its report in June of last year revealed that dealers have conspired to manipulate benchmark rates in the foreign-exchange markets.
