Bank of America Close To Paying Historic Settlement
June 29, 2011 by Personal Liberty News Desk
Bank of America Corp. may soon agree to pay an $8.5 billion settlement to investors who lost money in the housing collapse, which would be the largest such settlement by a financial-services firm to date.
“A settlement would end a nine-month fight with a group of 22 investors who hold mortgage-backed securities originally valued at $105 billion, including the giant money manager BlackRock Inc., the insurer MetLife Inc. and the Federal Reserve Bank of New York,” The Wall Street Journal reported. “The dispute between Bank of America and the mortgage investors began last fall when they alleged in a letter to the bank that securities they scooped up before the financial crisis from Countrywide Financial Corp. were full of loans that didn’t meet sellers’ promises about the quality of the borrowers or the collateral.”
The newspaper reported that such a huge settlement could endanger the job of the corporation’s chief executive officer, Brian Moynihan. “Mr. Moynihan told analysts in October that he wasn’t interested in a large lump-sum payment to make the mortgage-repurchase issue go away. But in December, Mr. Moynihan reversed course and decided to begin settlement talks,” the article read.
“If Bank of America goes ahead with the plan,” the article read, “it would hand $8.5 billion in cash to Bank of New York Mellon Corp., which acted as the trustee for the bondholders and would distribute the funds to the investors.”