Citing the reliable-but-shy, “people familiar with the situation,” the Wall Street Journal reports that the current state of the settlement has BofA paying around $9 billion in cash to various federal and state agencies, including the DOJ. The rest of the money would be doled out in relief to consumers.
A $17 billion would leap-frog the previous record-setting $13 billion settlement between the DOJ and JPMorgan Chase from 2013, and would put BofA’s legal tab for mortgage-related nonsense well over $50 billion.
According to the Journal, BofA had been balking on anything higher than $13 billion, but U.S. Attorney General Eric Holder apparently convinced the bank to budge after threatening to file a lawsuit over the pre-meltdown activities of Merrill Lynch, Bank of America saved from collapse in 2008.
Along with Merrill and BofA’s other idiotic acquisition, Countrywide, Bank of America is now responsible for nearly a trillion dollars in mortgage-backed securities that were sold in the years leading up to the bursting of the housing bubble. A lot of those securities, especially the ones backed by Countrywide loans, include worthless mortgages. Nearly a quarter of them have since defaulted or are severely delinquent, resulting in all sorts of lawsuits being filed, alleging that the banks knew the loans were toxic but passed them off as solid.
The Journal notes that the details of the BofA settlement are still being hammered out and that it could still fall apart.
In Oct. 2013, a federal jury found Bank of America liable for a Countrywide program, the High Speed Swim Lane (HSSL or “Hustle”) that expedited the loan approval process by removing a number of the safeguards that were intended to prevent people from taking out mortgages they couldn’t afford to repay. Last week, the court finally got around to putting a $1.27 billion price tag on the damages.