Business
Bank of America Offers U.S. Biggest Settlement in History Over Toxic Mortgage Loans
Bank of America’s headquarters in Charlotte, N.C. (Chuck Burton/Associated Press)
(New York Times) – After months of lowball offers and heels dug in, it took only 24 hours for Bank of America to suddenly cave in to the government, agreeing to the largest single federal settlement in the history of corporate America.
The tentative deal — which people briefed on the matter said would cost Bank of America more than $16 billion to settle investigations into its sale of toxic mortgage securities — started to take shape last week after the Justice Department rejected yet another settlement offer from the bank. Then, a wild card entered the fray.
Judge Jed S. Rakoff, a longtime thorn in the side of Wall Street and Washington, issued an unexpected ruling in another Bank of America case that eroded what was left of the bank’s negotiating leverage. Judge Rakoff, of Federal District Court in Manhattan, ordered the bank to pay nearly $1.3 billion for selling 17,600 loans, many of which were defective. Bank of America had previously lost that case, which involved its Countrywide Financial unit, at a jury trial.
