According to The Wall Street Journal, Bank of America (BAC) has reached a record $17 billion settlement with the U.S. Department of Justice [DOJ] to resolve claims over the toxic residential mortgage-backed securities the lender issued in the run-up to the 2008 financial crisis.
The report says BofA will pay $10 billion in cash and provide consumer relief – which would consist of help for homeowners in reducing principal amounts and monthly payments – valued at $7 billion. The report also said that the deal requires Bank of America to acknowledge making serious misrepresentations about the quality and the risk of its faulty mortgage-backed securities issued by itself and in those by Countrywide Financial and Merrill Lynch.
If finalized, the $17 billion settlement, which could be announced as early as Thursday, would set a record for fines and damages in a civil settlement between the U.S. government and a single company, and exceed the previous high of $13 billion paid by JP Morgan (JPM) in November to settle similar claims. At the time, the DOJ labeled JPM’s accord “the largest settlement with a single entity in American history.”
Shares of BofA are almost flat year-to-date and are currently trading around the mid-$15 level.