Bank Of America To Pay $16+ Billion In Largest Corporate Settlement


After months of lowball offers, Bank of America caved in and agreed to the largest federal settlement in the history of corporate America, reports the New York Times. The tentative deal, which would cost the bank 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 another settlement offer from the bank. U.S. District Judge Jed Rakoff issued an unexpected ruling in another Bank of America case that eroded what was left of the bank's negotiating leverage.
Rakoff 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. The bank's top lawyers and executives recognized that another courtroom battle would not only be futile but extremely expensive. On July 30, Attorney General Eric Holder delivered a simple demand: Raise your offer or be sued the next day. the next morning, the bank offered $9 billion in cash and more than $7 billion in so-called soft-dollar relief to consumers.

Comments are closed.