Bank of America Corp. agreed to pay a settlement of $16.65
billion over its mortgage lending, capping a legal odyssey that has
dogged it since the depths of the financial crisis.
The deal resolves a government investigation that stems largely
from the bank's purchases of Merrill Lynch & Co. and
Countrywide Financial Corp. as they teetered in the housing
crisis.
The settlement amount is the largest ever reached between the
U.S. and a single company, and is approximately equal to the
Charlotte, N.C., bank's total profit for the past three years. Bank
of America has spent more than $60 billion on legal woes stemming
from the financial crisis, and the latest settlement would push the
tab to close to $80 billion.
The settlement could provide a turning point for Bank of
America: Chief Executive Brian Moynihan, who has spent much of his
4 1/2 years as CEO wading through litigation, has told investors
and analysts this is the last of the big, lingering
financial-crisis problems.
In negotiations with the Justice Department, the bank's lawyers
argued the firm was being unreasonably punished for the actions of
Merrill and Countrywide, which together issued most of the
questionable mortgage securities at the center of the probe. But
prosecutors pushed back, saying the bank had benefited from Merrill
and bought Countrywide without any government prodding. The bank
lobbied unsuccessfully to pay most of the settlement in consumer
aid to homeowners, which would be less burdensome on the company's
bottom line.
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