Bank of America directors are supportive of its proposed $16 billion to $17 billion mortgage-securities settlement with the Justice Department, according to someone familiar with the matter, and the final details of the deal are expected to be ironed out in the coming days.
If things proceed apace, this person added, a final deal with some $9 billion in cash penalties and an additional $7 billion to $8 billion earmarked for consumer relief could be announced formally as early as Monday.
The proposed deal follows a contentious summer of talks between Bank of America—the bank with the biggest legal exposure to claims of fraud in the packaging and selling of mortgage-backed securities from prior to the financial crisis—and the Justice Department.
Bank of America has already paid or agreed to pay a combined $60 billion to settle previous lawsuits and other claims of fraudulent mortgage-issuance and sales practices filed by a wide swath of investors that range from sophisticated players, like BlackRock and AIG, to state attorneys general.
But last week, the very same day that a federal judge in New York demanded a $1.3 billion penalty in a related, but separate, mortgage-securities case, stating that a Bank of America subsidiary unit had engaged in “brazen fraud,” Holder spoke to Moynihan by telephone, demanding that Bank of America up the settlement amount under discussion or face an imminent Justice Department lawsuit.