Bank of America Corp (NYSE:BAC) is sad to be closing in on a$16- $17 billion settlement package with the Department of Justice (DOJ) on claims of involvement in faulty mortgage-backed securities during the economic crisis. CNBC’s Kayla Tausche is reporting that the agreement could reach $9 billion in cash penalties with an additional $7 billion to be paid in form of mortgage modifications and other consumer relief.
“The bank has been working through discussions with federal authorities over a potential settlement over faulty mortgage-backed securities stemming back to the financial crisis […]. The bank is nearing a settlement with the department of justice and relevant authorities in the various states that have been looking into this as well,” said Tausche.
Bank of America Corp (NYSE:BAC) has been going back and forth to the drawing board, trying to come to a consensual agreement with the Department of Justice in terms of the full settlement package. The cash portion has been the sticking portion of the agreement, initially threatening to halt the entire process. Bank of America is reported to have agreed to pay a total of $9 billion in cash, straight to the government.
“Bank of America Corp (NYSE:BAC) had been going back to the drawing board, back and forth. Several numbers were put on the table, Dow Jones reporting that this will come between $16 and $17 billion and also that the cash portion of this deal, which has been a sticking point in this discussion. The cash paid straight to the government verses in home reliefs that will be $9 Billion according to Dow Jones,” said Tausche.
The total settlement package could also change, taking into considerations JPMorgan Chase & Co. (NYSE:JPM)’s case whose figures changed after an agreement was struck. The settlement is expected to be extremely expensive for Bank of America Corp (NYSE:BAC) as the number is extremely higher than earlier expected.