Bank of America in DOJ settlement talks for $10B+
Just months after JPMorgan Chase paid $13 billion to settle charges that it misled investors about the quality of certain securities tied to home loans, rival Bank of America is discussing a similar deal with the Department of Justice that could cost it $10 billion or more, according to two people familiar with the matter.
Bank of America, one of the US largest banks and mortgage providers, has been working aggressively to put its mortgage liabilities behind it. Last month, it announced a $6.3 billion settlement of its outstanding mortgage-security and other contract issues with Fannie Mae and Freddie Mac. More recently, the bank swung to a first-quarter loss after setting aside an added $6 billion to pay down additional legal costs.
That revelation on April 17, which was followed by public comments by Bank of America Chief Financial Officer Bruce Thompson suggesting that future legal costs would be “hard to predict,” was nerve-racking for investors, who sold off shares during the company’s midmorning investor call.
Settlement talks with the federal government have gained urgency lately, as Bank of America executives look to resolve the pending Justice Department litigation as quickly as possible. Although the final payment figures are still up in the air, the sources familiar with the matter said, and a $13 billion tab reported late Thursday afternoon by Bloomberg News is certainly a possible outcome, the current discussions point only to an uncertain amount of more than $10 billion.