It's been less than a month since I last updated my comprehensive tally of Bank of America's (BAC 3.35%) post-financial crisis legal settlements. In this brief time period, however, the list has already expanded to include billions of dollars more in potential damages.
In April alone, Bank of America announced three new legal settlements. The first, involving securities fraud claims against Merrill Lynch by insurer The Allstate Corporation, covered an estimated $167 million in mortgage-backed securities. The second, encompassing identical claims brought by Allstate against Countrywide Financial, may have cost Bank of America upwards of $700 million -- precise figures weren't disclosed in either case. And the third concluded analogous litigation between Bank of America and Financial Guaranty Insurance Co. for $950 million.
More disturbing than either of these, however, are revelations related to new settlements that are purportedly in the works. One, which I discuss at length here, relates to a $2.5 billion case brought by Ambac Financial Group against Bank of America and its legacy companies. A second, discussed here, would resolve investigations by state and federal agencies into the bank's sale of mortgage-backed securities prior to the crisis. And a third would put an investigation by the Consumer Financial Protection Bureau into Bank of America's credit card practices to rest -- to read more about this one, click here.
All told, combined with the ongoing legal battle between the bank and American International Group, these disputes could still cost the nation's second-largest lender by assets more than $10 billion, if not more. Without future ado, in turn, here's the updated list of Bank of America's legal misdeeds since the financial crisis:
|
Date |
Description |
Settlement/Judgment Amount |
|---|---|---|
|
Pending |
According to The Wall Street Journal, Bank of America is engaged in "multibillion-dollar settlement talks with the Justice Department to end investigations into shoddy residential mortgage backed securities." |
While it isn't clear how large a settlement will be, the government's lead negotiator is said to have demanded a figure "billions of dollars above the $2.4 billion in legal charges" that Bank of America outlined in its latest quarterly earnings release. |
|
Pending |
Bank of America continues to litigate its dispute with American International Group over toxic mortgage-backed securities sold by the bank and its legacy companies. |
American International Group has amended its complaint multiple times, and is now seeking $5 billion in damages. |
|
Pending |
Rumors began circulating in April that Bank of America is concluding a settlement with mortgage-bond insurer Ambac Financial Group stemming from toxic mortgage-backed securities sold by the bank and its legacy companies (namely, Countrywide Financial) in the lead up to the crisis. |
According to Bank of America's latest annual report, Ambac is seeking roughly $2.5 billion in damages. |
|
Pending |
Bank of America is in talks with the Consumer Financial Protection Bureau to settle allegations that it "forced customers to sign up for extra credit card products." |
Media reports put the figure at $800 million. |
|
April 2014 |
Bank of America settlement of securities fraud claims related to mortgage-backed securities sold by Merrill Lynch to Allstate. |
Undisclosed (the lawsuit covered $167 million in mortgage-backed securities) |
|
April 2014 |
Bank of America settlement of securities fraud claims related to mortgage-backed securities sold by Countrywide Financial to Allstate. |
Undisclosed (ALL was seeking $700 million) |
|
March 2014 |
Bank of America settlement with Financial Guaranty Insurance Co. over toxic second-lien residential mortgage-backed securities. |
$950 million |
|
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 |
|
February 2014 |
Bank of America settlement of class action force-placed insurance dispute, claiming that it engaged in a "kickback scheme inflating the cost of insurance that homeowners were forced to buy." |
$228 million (though QBE Insurance Corp. was included in the settlement) |
|
December 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 |
|
December 2013 |
Countrywide settlement with Freddie Mac related to faulty mortgages sold to the government-sponsored entity from 2000 to 2009. |
$404 million |
|
October 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) |
|
September 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 |
|
September 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 |
|
September 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 |
|
August 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 |
|
June 2013 |
Settlement to resolve claims that Countrywide "deceptively lured consumers into buying loans with higher interest rates than originally promised." |
$100 million |
|
June 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 |
|
February 2013 |
Settlement to resolve allegations that Merrill Lynch failed to pay proper overtime to its client associates. |
$12 million |
|
February 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 |
|
January 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 |
|
January 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 |
|
September 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 |
|
July 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 |
|
July 2012 |
Settlement with Syncora Holdings regarding claims that the mortgage-bond insurer was duped into insuring Countrywide-issued mortgage-backed securities. |
$375 million |
|
February 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) |
|
December 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 |
|
December 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 |
|
August 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 |
|
June 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 |
|
February 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 |
|
January 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 |
|
January 2011 |
Settlement with Freddie Mac to "end all claims, including future claims, related to mortgages sold through 2008 by Countrywide." |
$1.28 billion |
|
January 2011 |
Settlement with Fannie Mae to settle claims on 12,045 Countrywide loans originated between 2004 and 2008. |
$1.52 billion |
|
December 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 |
|
November 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 |
|
October 2010 |
Bank of America covers part of former Countrywide CEO Angelo Mozilo's $67.5 million civil fraud settlement with the SEC. |
$20 million |
|
July 2010 |
Bank of America settlement of class action antitrust claims regarding credit card arbitration. |
$0 (injunctive relief) |
|
June 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 |
|
February 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 |
|
July 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 |
|
June 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 |
|
January 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 |
|
October 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 and Exchange Commission, Federal Trade Commission, Reuters, Bloomberg, The New York Times, and The Wall Street Journal.
