Bank of America reaches record $17bn settlement over questionable mortgages

Deal resolves investigation into mortgage-backed securities sales and is largest settlement arising from 2008 financial crisis

theguardian.com, Associated Press in Washington, Thursday 21 August 2014

Bank of America. The deal requires the bank to acknowledge making serious
 misrepresentations about the quality of its residential mortgage-backed securities.
Photograph: Matt Rourke/AP

Bank of America has reached a record settlement of nearly $17bn (£10.2bn) to resolve an investigation into its role in the sale of mortgage-backed securities before the 2008 financial crisis, officials directly familiar with the matter have said.

One official, who spoke with AP on condition of anonymity because the announcement was not scheduled until Thursday at the earliest, said the bank will pay $9.65bn in cash and provide consumer relief valued at $7bn.

The deal is the largest settlement arising from the economic meltdown in which millions of Americans lost their homes to foreclosure. It follows agreements in the past year with Citigroup for $7bn and with JPMorgan Chase & Co for $13bn.

Like the Bank of America deal, those settlements were a mixture of hard cash and "credits" for various forms of consumer aid that the banks have promised to provide in coming years.

The Bank of America settlement was negotiated through a joint federal and state working group established by the US president, Barack Obama, two years ago with the justice department and other federal and state authorities. Individual states are expected to share in the settlement.

Justice department spokeswoman Ellen Canale declined to comment, as did the New York attorney general, Eric Schneiderman, a co-chairman of the group. The bank also declined comment.

The deal requires Bank of America to acknowledge making serious misrepresentations about the quality of its residential mortgage-backed securities issued by itself and by Countrywide Financial and Merrill Lynch. Those institutions were acquired by the bank when they were on the brink of failure in 2008 and they were responsible for the bulk of the questionable loans.

The deals are intended to offer some financial relief to homeowners, whose mortgages were bundled into securities by the banks and then sold to investors.

The securities contained residential mortgages from borrowers who were unlikely to be able to repay their loans. Yet, the securities were promoted as relatively safe investments until the housing market collapsed and investors suffered billions of dollars in losses.

The poor quality of the loans also led to a slew of foreclosures, kicking off the recession that began in late 2007. The cash totals now being paid by some of the country's largest banks are not nearly enough to reverse the damage caused by the bursting of the housing bubble and the ensuing recession.

Bank of America had argued that it should not be held liable for the subprime mortgages issued by Countrywide and Merrill Lynch. Combined, those three firms issued $965bn in mortgage-backed securities from 2004 to 2008, according to public records. Roughly 75% of that came from Countrywide.

In a federal lawsuit last year, the Securities and Exchange Commission charged Bank of America and two subsidiaries with defrauding investors in an offering of residential mortgage-backed securities by failing to disclose key risks and misrepresenting facts about the underlying mortgages.

The justice department filed a parallel civil action against Bank of America, alleging violations of the Financial Institutions Reform, Recovery, and Enforcement Act.

Related Article:

"The Recalibration of Awareness – Apr 20/21, 2012 (Kryon channeled by Lee Carroll) (Subjects: Old Energy, Recalibration Lectures, God / Creator, Religions/Spiritual systems  (Catholic Church, Priests/Nun’s, Worship, John Paul Pope, Women in the Church otherwise church will go, Current Pope won’t do it),  Middle East, Jews, Governments will change (Internet, Media, Democracies, Dictators, North Korea, Nations voted at once), Integrity (Businesses, Tobacco Companies, Bankers/ Financial Institutes, Pharmaceutical company to collapse),  Illuminati (Started in Greece, with Shipping, Financial markets, Stock markets, Pharmaceutical money (fund to build Africa, to develop)), Shift of Human Consciousness, (Old) Souls, Women, Masters to/already come back, Global Unity.... etc.) - (Text version)

“…  The Shift in Human Nature

You're starting to see integrity change. Awareness recalibrates integrity, and the Human Being who would sit there and take advantage of another Human Being in an old energy would never do it in a new energy. The reason? It will become intuitive, so this is a shift in Human Nature as well, for in the past you have assumed that people take advantage of people first and integrity comes later. That's just ordinary Human nature.

In the past, Human nature expressed within governments worked like this: If you were stronger than the other one, you simply conquered them. If you were strong, it was an invitation to conquer. If you were weak, it was an invitation to be conquered. No one even thought about it. It was the way of things. The bigger you could have your armies, the better they would do when you sent them out to conquer. That's not how you think today. Did you notice?

Any country that thinks this way today will not survive, for humanity has discovered that the world goes far better by putting things together instead of tearing them apart. The new energy puts the weak and strong together in ways that make sense and that have integrity. Take a look at what happened to some of the businesses in this great land (USA). Up to 30 years ago, when you started realizing some of them didn't have integrity, you eliminated them. What happened to the tobacco companies when you realized they were knowingly addicting your children? Today, they still sell their products to less-aware countries, but that will also change.

What did you do a few years ago when you realized that your bankers were actually selling you homes that they knew you couldn't pay for later? They were walking away, smiling greedily, not thinking about the heartbreak that was to follow when a life's dream would be lost. Dear American, you are in a recession. However, this is like when you prune a tree and cut back the branches. When the tree grows back, you've got control and the branches will grow bigger and stronger than they were before, without the greed factor. Then, if you don't like the way it grows back, you'll prune it again! I tell you this because awareness is now in control of big money. It's right before your eyes, what you're doing. But fear often rules. ...”