News Column

Bank of America pays $16.5 bn to settle financial fraud case

August 21, 2014



Washington, Aug 21 (EFE).- The U.S. Justice Department on Thursday announced a settlement with Bank of America Corp. that calls for the country's No. 2 bank to pay $16.5 billion for misleading investors into buying risky mortgage-backed securities.

The penalty is equivalent to Bank of America's total profit over the past three years.

"This historic resolution - the largest such settlement on record - goes far beyond 'the cost of doing business,'" Attorney General Eric Holder said at a press conference.

"Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank's conduct. This is appropriate given the size and scope of the wrongdoing at issue," he said.

The bank will pay $9.65 billion in cash and extend $7 billion in mortgage relief.

"We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future," Bank of America CEO Brian Moynihan said in a statement.

These securities were sold by Countrywide Financial and Merrill Lynch before Bank of America acquired those two companies in 2008 amid the financial crisis.

The settlement follows months of negotiations between the Justice Department and the bank and is the latest in a series of similar agreements.

Citigroup agreed to pay $7 billion in July and JPMorgan Chase settled for $13 billion late last year to resolve federal allegations that it duped investors into buying risky securities backed by subprime home loans. EFE

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Source: EFE Ingles


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