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

Bank of America has offered a record-breaking $14 billion to settle a Justice Department probe over the sale of shoddy mortgage-backed securities -- but the government is demanding more

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.