THE fallout for big banks from the global financial crisis is continuing, with Bank of America the latest in a string of institutions hit with multi-billion dollar fines.
Bank of America has tentatively agreed to pay a record $17.11 to $18.18 billion settlement to resolve allegations it misled investors on mortgage-linked securities, a person familiar with the matter said Wednesday.
The Justice Department settlement — covering securities allegedly mis-sold ahead of the housing bust — is expected to be revealed by next week, according to the source, who spoke on the condition of anonymity and confirmed reports in US media.
Under the preliminary agreement, the latest covering bank misconduct before the housing bust, BofA would pay a roughly $9.62 billion cash penalty to the US Treasury. Negotiations are currently focusing on the remaining portion of the agreement covering consumer relief, the source told AFP.
There is still a slim chance the deal could fall apart, the source added. The sum now being discussed is billions above the level BofA said it was willing to accept earlier in the talks, according to reports Wednesday in the New York Times and the Wall Street Journal.
It would also exceed a record $13.9 billion pact between JP Morgan Chase and the Justice Department last November over similar allegations.
Large US banks continue to face massive settlements with US agencies over their work to prepare and sell securities that misrepresented the risk of underlying mortgages, often rating the loans as safe when they were high-risk and later went bust.
Citigroup in July agreed to pay $7.48 billion to settle similar claims.