BOA ups settlement offer to $14bn, government still balks

by Ryan Smith31 Jul 2014
Bank of America wants to be done with government probes. The bank significantly upped its settlement offer to resolve a Justice Department probe over mortgage-backed securities, but the two sides still haven’t reached an agreement.

Attorneys for the bank met with Justice Department officials Wednesday to continue talks. The government has demanded $17 billion from the bank, including a cash penalty of $10 billion and $7 billion in payments to struggling homeowners. The bank was offering $13 billion – a $4 billion cash penalty and the rest in homeowner relief.

On Wednesday, Bank of America upped its offer to $14 billion, including a $7 billion cash penalty, according to a New York Times report. If accepted, the $14 billion settlement would break the previous record for a settlement with a single entity, last year’s $13 billion agreement with JPMorgan Chase.

But the government, still seeking a larger cash penalty, has refused the offer, according to the Times. If a settlement is not reached soon, the Justice Department may sue the bank.

And the lawsuit may well be successful. Bank of America doesn’t exactly have a great track record fighting government litigation. On Wednesday, the bank was ordered to pay a $1.3 billion penalty for fraudulent mortgage-bond sales in its Countrywide unit.


  • by | 7/31/2014 9:46:01 AM

    I just want to make sure I understand this correctly. In the first offer of 13 billion, the home owners would have received 9 billion and the government would have received 4 billion. At that point the government said no, cut the home owners down to 7 billion and give us 10 billion.

  • by Jim | 7/31/2014 10:09:40 AM

    You got it. Instead of helping the homeowners who have been screwed by the whole situation the government would rather leave then screwed and take most of money to use as IT sees fit.

  • by | 7/31/2014 10:46:54 AM

    The usual shakedown! The pattern is always the same; the officials get the lion's share off the top and the people they are serving get the crumbs. The perpetrators never see a pair of handcuffs or the inside of a holding cell and are allowed to continue business as usual as long as they pay "penalties" from time to time.
    It is an old process used by bureaucrats since ancient Persia. It worked so well through the ages that the Mob eventually adopted it (remember Don Fanucci in the Godfather).


Should CFPB have more supervision over credit agencies?