The Shocking (and Long) List of Bank of America’s Legal Misdeeds

On Wednesday, Bank of America (NYSE: BAC  ) announced what's likely to be its last major legal settlement related to the financial crisis. The deal calls for the bank to pay the Federal Housing Finance Agency $9.5 billion, split between an outright cash payment of $6.3 billion and $3.2 billion in ancillary obligations.

Although smaller claims and settlements are bound to trickle in, this latest deal largely draws to a close the most inglorious chapter in Bank of America's 100-plus year existence. Since 2008, it's paid out tens of billions of dollars stemming from allegations of securities fraud, breach of contract, racial and gender discrimination, and a whole host of other deplorable business practices.

Earlier this year, I drew up a comprehensive list of these claims. What follows is an updated version that includes the handful of recent additions. Suffice it to say, it's been a long five years for the nation's second largest bank by assets.

Date

Description

Settlement/Judgment Amount

March 2014

Bank of America settlement with the Federal Housing Finance Agency over claims that the bank -- principally, Countrywide Financial -- defrauded Fannie Mae and Freddie Mac.

$9.5 billion

March 2014

Bank of America and former-CEO Ken Lewis settlement of securities-fraud charges with the New York Attorney General related to the bank's 2008 acquisition of Merrill Lynch.

$25 million

Feb. 2014

Bank of America settlement of force-placed insurance dispute.

Undisclosed

Dec. 2013

Merrill Lynch settlement with the Securities & Exchange Commission related to the structuring and sale of complex mortgage securities to institutional investors in 2006 and 2007.

$131.8 million

Dec. 2013

Countrywide settlement with Freddie Mac related to faulty mortgages sold to the government-sponsored entity from 2000 to 2009.

$404 million

Oct. 2013

Bank of America found liable for fraud over defective mortgages sold to Fannie Mae and Freddie Mac as a part of a shoddy home loan process at Countrywide known as the "Hustle."

$2 billion (the court has yet to rule on damages, but this is roughly what the government is seeking)

Sept. 2013

Settlement to resolve claims that Bank of America employees made harassing debt collection calls to customers' cell phones in violation of the 1991 Telephone Consumer Protection Act.

$32 million

Sept. 2013

Bank of America fined by the U.S. Department of Labor for hiring practices that kept qualified black job applicants from getting jobs.

$2.2 million

Sept. 2013

Merrill Lynch settlement to resolve a class action gender discrimination lawsuit brought by female brokers alleging they were "paid less than men and deprived of handling their fair share of lucrative accounts."

$39 million

Aug. 2013

Settlement to resolve a class action racial discrimination lawsuit alleging that Merrill Lynch segregated its workforce by, among other things, steering black brokers into clerical positions and reassigning their accounts to white workers.

$160 million

Jun. 2013

Settlement to resolve claims that Countrywide "deceptively lured consumers into buying loans with higher interest rates than originally promised."

$100 million

Jun. 2013

Fined by the Financial Industry Regulatory Authority after an investigation found that Bank of America's brokers steered retail investors toward a type of mutual fund that was riskier than what they were seeking.

$2 million

May 2013

Settlement to resolve claims brought by mortgage-bond insurer MBIA (NYSE: MBI  ) related primarily to toxic mortgages originated mainly by Countrywide.

$1.7 billion

April 2013

Settlement with private investors in a class action securities-fraud lawsuit involving Countrywide-issued mortgage-backed securities.

$500 million

April 2013

Bank of America settlement with the National Credit Union Administration to resolve claims stemming from sales of mortgage-backed securities to credit unions that led them to fail.

$165 million

Feb. 2013

Settlement to resolve allegations that Merrill Lynch failed to pay proper overtime to its client associates.

$12 million

Feb. 2013

Settlement to resolve a class action lawsuit alleging that Bank of America violated the Real Estate Settlement Procedures Act by failing to respond to mortgagees' requests for information relating to the servicing of their home loans.

$19 million

Jan. 2013

Bank of America joined with nine other lenders to resolve claims of foreclosure abuse related to the financial crisis. The aggregate settlement for all participants was $8.5 billion.

$2.9 billion

Jan. 2013

Settlement with Fannie Mae resolving claims that Bank of America -- namely, Countrywide -- sold tens of billions of dollars' worth of faulty mortgages to the government-sponsored entity.

$11.2 billion

Sept. 2012

Bank of America settlement of class action lawsuit brought by B of A's shareholders alleging that the bank provided "false and misleading statements about the health of" Merrill Lynch in the lead up to the acquisition. The deal was approved by a judge in April of 2013.

$2.43 billion

Jul. 2012

Bank of America settlement of class action lawsuit alleging that the bank "used deceptive marketing tactics to sign up and charge credit card customers for a useless credit-protection service."

$20 million

Jul. 2012

Settlement with Syncora Holdings regarding claims that the mortgage-bond insurer was duped into insuring Countrywide-issued mortgage-backed securities.

$375 million

Feb. 2012

Bank of America settlement with federal and state regulators and agencies related to faulty foreclosure and servicing practices.

$11.82 billion ($3.2 billion in federal and state payments, $8.58 billion in relief to borrowers)

Dec. 2011

Settlement of U.S. Justice Department charges that Countrywide carried out a "widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers."

$335 million

Dec. 2011

Settlement of class action suit against Merrill Lynch brought by investors alleging that the investment bank misled them about the risks associated with $16.5 billion of mortgage-backed securities in 18 offerings made between 2006 and 2007.

$315 million

Aug. 2011

Bank of America settlement with the City of San Francisco over allegations that the bank's FIA Card Services used a rigged system to arbitrate credit card debt collection disputes.

$5 million

Jun. 2011

Countrywide reaches preliminary $8.5 billion settlement with The Bank of New York Mellon and 22 institutional investors (including Goldman Sachs and Blackrock) over toxic mortgage-backed securities.

$8.5 billion

May 2011

Countrywide settlement with the U.S. Department of Justice over allegations that Countrywide "wrongfully foreclosed upon active duty servicemembers without first obtaining court orders."

$20 million

April 2011

Countrywide settlement with mortgage-bond insurer Assured Guaranty over toxic Countrywide-issued mortgage-backed securities.

$1.6 billion

Feb. 2011

Bank of America settlement of class action lawsuit claiming that it "improperly increased the interest rate on delinquent or defaulted FIA, MBNA and Bank of America credit cards by calculating the rate increase starting at the beginning of the billing cycle in which the default or delinquency occurred."

$10 million

Jan. 2011

Bank of America settlement of class action debit-card overdraft lawsuit. Here's how one plaintiff described it: "The bank actively provides false or misleading balance information to these customers, including plaintiff, that in turn deceives these customers into making additional transactions that, in turn, will generate even more overdraft fees for the bank."

$410 million

Jan. 2011

Settlement with Freddie Mac to "end all claims, including future claims, related to mortgages sold through 2008 by Countrywide."

$1.28 billion

Jan. 2011

Settlement with Fannie Mae to settle claims on 12,045 Countrywide loans originated between 2004 and 2008.

$1.52 billion

Dec. 2010

Bank of America settlement with 19 state attorneys general and four federal agencies over bid-rigging charges in the municipal bond market.

$137 million

Nov. 2010

Countrywide settlement of class action lawsuit related to overcharging for mortgage insurance in violation of the Real Estate Settlement Procedures Act of 1974 (RESPA).

$34 million

Oct. 2010

Bank of America covers part of former Countrywide CEO Angelo Mozilo's $67.5 million civil fraud settlement with the SEC.

$20 million

Jul. 2010

Bank of America settlement of class action antitrust claims regarding credit card arbitration.

$0 (injunctive relief)

Jun. 2010

Countrywide settlement with the Federal Trade Commission over allegations that it overcharged customers who were struggling to hang onto their homes.

$108 million

May 2010

Countrywide settlement of class action securities fraud claims made by institutional investors, including New York pension funds, alleging that the lender misled them about its health.

$600 million

Feb. 2010

Bank of America finalizes settlement with the SEC over its failure to "properly disclose employee bonuses and financial losses at Merrill Lynch before shareholders approved the merger of the companies in December 2008."

$150 million

Jul. 2009

Bank of America settlement of racial discrimination class action accusing it of "routinely giving black workers short shrift with respect to pay, advancement and resources."

$7.2 million

Jun. 2009

Bank of America finalizes settlement with Securities & Exchange Commission and several states over alleged misrepresentations the bank made to customers about the safety and liquidity of auction-rate securities.

$4.5 billion in "restored liquidity" to the ARS market

Jan. 2009

Merrill Lynch settlement of securities fraud case with institutional investors in its common and preferred shares between Oct. 17, 2006 and Dec. 31, 2008. The plaintiffs alleged that the investment bank inflated the price of collateralized debt obligations (CDOs) in order to boost its own share price.

$475 million

Oct. 2008

Countrywide settlement with eleven states over predatory lending allegations including, relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims like its "no closing costs loan."

$8.4 billion in "direct loan relief." At the time, "it was the largest predatory lending settlement in history, far exceeding the $484 million deal struck in 2002 with the Household Finance Corporation."

Sources: Bank of America, U.S. Dept. of Justice, New York Attorney General's Office, Securities & Exchange Commission, Federal Trade Commission, Reuters, Bloomberg, The New York Times, and The Wall Street Journal.

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  • Report this Comment On April 16, 2014, at 3:59 PM, sluggo47 wrote:

    The real question is what are the cases outstanding??

  • Report this Comment On April 29, 2014, at 12:44 AM, aacole wrote:

    It keeps going and why no outrage???

    I say sell ..... out of principle!!!

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