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August 22, 2014

Bank of America Likely to Pay Far Less Than $17 Billion in Record Deal 
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The Justice Department has unveiled a more than $16.6 billion settlement
with Bank of America over its sale of toxic residential mortgage-backed
securities, or RMBS. Attorney General Eric Holder said the deal is the
largest civil settlement with a single entity in history.

Eric Holder: "As a part of this settlement, Bank of America has
acknowledged that in the years leading up to the financial crisis that
devastated our economy in 2008, it, Merrill Lynch and Countrywide sold
billions of dollars of RMBS backed by toxic loans whose quality and
level of risk they knowingly misrepresented to investors and to the
United States government."

The settlement includes $7 billion in relief measures for homeowners,
meaning the bank's actual burden is likely far less than the record
total announced. Critics say very few homeowners will actually benefit
compared to the millions who lost their homes to foreclosure during the
financial crisis. The U.S. Public Interest Research Group says Bank of
America could receive approximately $5.6 billion in tax deductions from
the deal, a burden that would be shifted onto taxpayers.

 

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