Bank of America to pay record fine
china.org.cn / chinagate.cn, August 22, 2014 Adjust font size:
Bank of America agreed to pay a record settlement of nearly 17 billion U.S. dollars with the U.S. Department of Justice to resolve mortgage- related litigations and investigations, according to Xinhua News Agency.
The U.S. federal and state claimed that the bank misled investors into buying troubled mortgage-backed securities.
The loans were sold by Countrywide Financial and Merrill Lynch before Bank of America bought them in 2008, at the height of the financial crisis.
The associate attorney general said "no institution is either too big or too powerful to escape" punishment.
The settlement will cut the bank's third-quarter profits by US$5.3 billion.
Bank of America will pay a total of US$9.65 billion in cash and provide consumer relief worth about US$7 billion, much of which will go towards homeowners struggling with their mortgages.
The cash component consists of a US$5 billion civil penalty and US$4.63 billion in compensation payments.
The case focused on Countrywide Financial, the biggest lender at the time of the crisis, and Merrill Lynch selling mortgage loans to investors but not explaining the full extent of the risk involved.
