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

If it seems like Bank of America has been in a constant state of legal trouble since 2008, you're right. Here's the first widely available and comprehensive list of Bank of America's legal misdeeds over the past five-plus years.

Mar 30, 2014 at 8:00AM

G

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.

The biggest change you never saw coming
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

John Maxfield owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers