WASHINGTON, Aug. 21 (UPI) -- Bank of America reached a deal to pay nearly $17 billion in a settlement over selling toxic mortgage-backed securities before the 2008 financial crisis, the Department of Justice said Thursday.
"This historic resolution -- the largest such settlement on record -- goes far beyond 'the cost of doing business,'" Attorney General Eric Holder said in a statement.
The settlement deal involves a record $9.65 billion fine and $7 billion to be paid to homeowners struggling with mortgage payments or buyers unable to find financing for new home loans.
Like the $7 billion settlement with Citigroup and $13 billion agreement with JPMorgan Chase, the payment comes in a mix of cash and "credits" the bank promises to pay forward in forms of aid to its customers in the future.
No criminal charges have been filed against any of the banks or their executives, but Bank of America is required to own up to seriously misrepresenting the quality of its securities and those of Countrywide Financial and Merrill Lynch, which were both acquired by Bank of America in early 2009 while teetering on bankruptcy.
Negotiations nearly fell through when Bank of America resisted taking responsibility for the Countrywide and Merrill Lynch security, but agreed after DOJ lawyers threatened to go forward with a formal lawsuit.
"We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future," Bank of America CEO Brian Moynihan said in a statement.
Bank of America will pay $6.8 billion to the DOJ, $1.03 billion to the Federal Deposit Insurance Corp., $245 million to the Securities and Exchange Commission, $300 million each to California and New York, $200 million to Illinois, $75 million to Maryland, $45 million to Delaware and $23 million to Kentucky.
The bank's stock was up about 3 percent, to $16, nearing close Thursday.
