The latest addition to the BofA legal tab, which has been looking at $40 billion in the rearview mirror for some time, is to settle claims tied to losses at five now-closed wholesale credit unions that took a bath on securities backed by mortgages so toxic they might turn you into a supervillain if you were to get too close.
The National Credit Union Administration, an independent federal regulator that charters and supervises federal credit unions, had accused, but not yet filed suit against, BofA for misrepresenting certain mortgage-backed securities as solid, when the loans backing the securities might as well have been written in crayon on toilet paper.
The credit unions took substantial losses because of these flimsy securities and the NCUA is attempting to recoup the money.
It had previously reached settlements with Citi, Deutsche Bank, and HSBC for a total of $170 million over similar charges. Today’s settlement almost doubles that amount.
“As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions,” said NCUA Board Chairman Debbie Matz. “We have a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected.”
Even though it’s forking over $165 million, BofA is not admitting it, or the folks at Countrywide or Merrill Lynch, did anything wrong.
In addition to the settlements that have already been reached, the NCUA has suits pending against Barclays Capital, Credit Suisse, Goldman Sachs, JPMorgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear, Stearns, all relating to the losses from these same now-shuttered credit unions.
Meanwhile, Bank of America is en route to a possible three-peat as runner up in our Worst Company In America tournament. It recently routed Chase in Round 2 and will face Walmart in the quarterfinals!