‘Bank of America to pay R182bn settlement’

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BankofAmerica11111 Reuters. A man uses a Bank of America ATM in uptown Charlotte.

New York - Bank of America has reached a tentative deal with the Justice Department to pay $16-$17 billion (R182 billion) to resolve allegations it misled investors on mortgage-linked securities, US media reported Wednesday.

Under the preliminary agreement, the latest covering bank misconduct before the housing bust, BofA would pay a roughly $9

billion cash penalty to the US Treasury, according to reports in the New York Times and the Wall Street Journal.

The additional money would go for consumer relief, such as reducing mortgage balances, the Journal said.

The deal is not finalised and could still fall apart, the reports said.

The sum now being discussed is billions above the level BofA said it was willing to accept earlier in the talks, according to the reports. It would also exceed a record $13 billion pact between JPMorgan Chase and the Justice Department last November over similar allegations.

Large US banks continue to face massive settlements with US agencies over their work to prepare and sell securities that misrepresented the risk of underlying mortgages, often rating the loans as safe when they were high-risk and later went bust.

Citigroup in July agreed to pay $7 billion to settle similar claims. - Sapa-AFP

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