Bank of America confirms it will pay record $16.65bn settlement - UPDATE
Bank of America Corp.
$38.91
11:09 15/05/24
Bank of America has agreed pay a record settlement of $16.65bn in response to an investigation into transactions relating to the 2008 financial crisis, the
Justice department said on Thursday.
The bank, which will pay a $5bn penalty and billions in consumer relief, deceived investors into buying mortgage-backed securities in the lead up to the recession.
The securities were largely the responsibility of Merrill Lynch and Countrywide Financial, both of which Bank of America acquired when they were on the verge of going bust. The result was a huge number of foreclosures.
"This historic resolution - the largest such settlement on record - goes far beyond 'the cost of doing business," said Attorney General Holder.
"Under the terms of this settlement, the bank has agreed to pay $7bn in relief to struggling homeowners, borrowers and communities affected by the bank's conduct. This is appropriate given the size and scope of the wrongdoing at issue."
The department stressed that the settlement did not mean individuals would not face civil charges or criminal prosecution.
The total sum, which is equivalent to around £10.2bn, is significantly bigger than the sums faced by JPMorgan Chase & Co and Citigroup, at $13bn and $7bn respectively.
"At nearly $17bn, today's resolution with Bank of America is the largest the department has ever reached with a single entity in American history," added Associate Attorney General West.
"But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America's conduct through a $7bn consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis."
As part of the settlement, the bank has admitted to having made serious misrepresentations about the quality of the securities.
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