The New York Times reports that talks between Bank of America (BAC) and the U.S. Justice Department have stalled after the bank’s latest offer — more than $12 billion to settle several federal and state civil investigations for its role in the sale of faulty mortgage-backed securities to investors — fell far short of the government’s demand for a settlement worth roughly $17 billion.
On Tuesday, as Bank of America sought to continue negotiations, the Justice Department, which had imposed a Monday evening deadline for the bank to deliver its final offer, moved to put the finishing touches on a civil complaint against the bank, the report said, citing people briefed on the matter.
The lawsuit, which the publication notes “is not imminent”, is expected to accuse the second-largest US bank of selling mortgage investments that led to billions of dollars in losses.
Bank of America is among at least 8 banking institutions under investigation by the Justice Department, and state AGs over the quality of home mortgages backing bonds sold before the 2008 financial crisis.
BofA shares are down 25 cents, or 1.56%, at $15.67 in pre-market trading Wednesday.