Bank of America Corp (NYSE:BAC)’s settlement toll has been far greater than any other bank that contributed to the financial crisis. However, the lawsuits the banks face have one commonality – deception. For example, Citigroup Inc (NYSE:C) this spring settled a $730 million lawsuit with the Arkansas Teacher Retirement Systems and Louisiana Sheriffs’ Pension and Relief Fund over allegations that it deliberately did not inform them about the full risks of the investment. That was the second largest settlement dealing with investor litigation born from the financial crisis.
Wells Fargo last year settled with the U.S. Justice Department for $125 million to compensate borrowers who were steered into sub-prime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin.
J.P. Morgan is embroiled in a $2 billion lawsuit with Dexia, a European bank, that it was egregiously fraudulent when it sold it loans that secured debt it had purchased.
Schneiderman specifically named Bank of America Corp (NYSE:BAC) and Wells Fargo as the focus of this latest lawsuit, but he did not rule out going after the other three, notes Reuters.
In November, Bank of America reported that it had completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of Sept. 30 through programs established under the National Mortgage Settlement.
In addition to the National Mortgage Settlement, Bank of America has had to contend with what could be its biggest headache – the fallout from buying Countrywide. It made the purchase of the mortgage lender in 2008, just before millions of dollars worth of toxic loans Countrywide had made came to light. Last month, it announced it had reached a $500 million settlement with several investors who charged Countrywide duped them into buying its risky mortgage-backed securities.
All of these settlements are zapping the profits the bank is reaping. For example, when the bank reported its first quarter earnings last month, it noted that revenues had climbed to roughly $24 billion. However, it reported that its profits for the upcoming quarter would miss guidance, and that’s partly due to the settlements.
The article N.Y. A.G. Gives BofA Shareholders News To Mull Ahead of Meeting originally appeared on Fool.com and is written by Tedra DeSue.
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