According to multiple reports by the media, the Bank of America Corp is expected to shell out a whooping $16.65 billion in settlement of the mortgage securities charges slapped by the US government. The Wall Street Journal said that the allegations of flawed mortgage securities sale has stemmed by the government's efforts to hold financial institutions responsible for the 2008 financial crisis. The paper said that the settlement is set to be the largest ever reached between a single company and the US.
The announcement was made by Attorney General Eric Holder in Washington on Thursday morning, the New York Times reported. Holder said that the Bank of America is expected to pay $9.65 billion as cash penalty and will also provide $7 billion to blighted neighborhoods and homeowners as relief to counter the damage the securities have cost.
In a prepared statement, Holder read, "The size and scope of this multibillion-dollar agreement go far beyond the ‘cost of doing business.' This outcome does not preclude any criminal charges against the bank of its employees. Nor was it inevitable over these last few weeks that this case would be resolved out of court."
The Times noted that along with the deal announced on Thursday, Bank of America has already spent near $70 billion in legal fees related to mortgage issues. Although it is a costly price to pay for a corporation alone, Bank of America CEO Brian T. Moynihan expressed in a separate statement that the decision to settle was an overall good move in order for the company to move on from the financial fiasco.
In addition, USA Today said that the Securities and Exchange Commission also revealed that the bank had admitted wrongdoing and will also be paying $245 million to resolve securities fraud charges filed against the company last year in relation to residential mortgage-backed securities. The news outlet noted that Bank of America has stepped up with the responsibility of its part in the financial crisis when it purchased Countrywide Financial back in 2008. The fraudulent activity reportedly occurred in Countrywide and in participation with brokerage bank Merrill Lynch, of which Bank of America has also acquired.
