Bank of America Corp’s 10 Biggest Legal Settlements Since 2008

Bank of America's latest settlement adds to a growing list of massive deals that the North Carolina-based lender has entered into over the last six years.

Jun 16, 2014 at 9:25AM


If you're a shareholder in Bank of America (NYSE:BAC), then you've probably heard that the North Carolina-based lender is on the cusp of yet another multibillion-dollar legal settlement with the federal government.

This one involves an investigation by the Justice Department and several state attorneys general into how the bank -- and, more specifically, its ne'er-do-well subsidiary Countrywide Financial -- originated faulty mortgages that were then packaged into mortgage-backed securities and sold to institutional investors such as insurance companies, pension funds, and university endowments.

Bank of America is no stranger to complex legal disputes involving multiple adversaries. Since 2008, it has entered into global settlements on four separate occasions for a combined total of $31.6 billion in various types of relief (click here for a full list of Bank of America's settlements over the last six years). 

But even given this history, the latest deal could be historic. While Bank of America has offered to pay a staggering $12 billion to resolve the controversy, the government has threatened formal legal action unless the company raises its bid by another $5 billion.

That would put the total at $17 billion and make an analogous $13 billion deal between JPMorgan Chase (NYSE:JPM) and the same government agencies seem cheap -- particularly so when you consider that Bank of America has already paid the Federal Housing Finance Administration $9.5 billion.

With this in mind, I thought it would be interesting to see how this would compare to Bank of America's previous large settlements. As you can see in the chart below, it would be without equal.


Given this list -- not to mention the 37 other notable settlements that Bank of America has entered into since the crisis -- it's easy for investors to become desensitized to yet another multibillion-dollar deal. 

However, I would caution you against this for two reasons.

First, every deal matters. Each dollar that is paid to a legal adversary is one that won't make its way to Bank of America's bottom line and thereby eventually to its shareholders via dividends or growth in book value.

The net result is that deals like this diminish the net present value of both the bank itself and each of its individual shares (click here for a division-by-division breakdown of Bank of America's value).

The second reason is all of these settlements are evidence of an organization willing to elevate revenue generation over risk management. This is a mortal sin in banking, and it's one that becomes ingrained in a lender's permanent culture.

The point here is that every settlement matters, and none as much as the massive one coming down the pike now.

These stocks beat the big banks
Here's your chance to pocket big dividends. Over time, dividends can make you significantly richer. And guess what? Bank of America is a big laggard when it comes to paying dividends. So instead of waiting for a cash windfall that may never come, check out these stocks that are paying big dividends to their investors RIGHT NOW. Click here for the exclusive free report.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America and JPMorgan Chase. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

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.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

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. The show is also heard weekly on dozens of 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. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers