The settlement, as reported by the Justice Department, is the largest single- company resolution of its kind in U.S. history. The breakdown in payments includes $9.65 billion in fines and $7 billion in direct aid to homeowners affected by Bank of America’s lending practices, a primary culprit in the financial meltdown that led to the Great Recession.
“This historic resolution- the largest such settlement on record- goes far beyond the cost of doing business”, said Attorney General Eric Holder. “Under the terms of this settlement, the bank has agreed to pay $7 billion 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”, said Holder.
Bank of America inherited a load of toxicity when it acquired Countrywide Financial Corp and Merrill Lynch. A high percentage of the bad loans can be traced to Countrywide and Associate Attorney General Tony West stated that Bank of America and/or the companies it acquired deliberately misled investors.
“It's kind of like going to your neighborhood grocery store to buy milk advertised as fresh, only to discover that store employees knew the milk you were buying had been left out on the loading dock, unrefrigerated, the entire day before, yet they never told you,” said West.
“And just like you might be in for an unpleasant surprise when you got home and poured yourself that glass of milk, investors -- such as public pension funds and federally insured financial institutions -- were unpleasantly met with billions of dollars in losses when those securities investments soured,” West added.
With the settlement complete, Bank of America can put to rest the claims brought against it by the SEC, U.S. Justice Department, and various agencies representing different state governments. This historic resolution follows a $7 billion settlement with Citigroup and a $13 billion settlement with JP Morgan Chase, the latter of which ranked as the largest ever until Bank of America’s agreement today.