WASHINGTON D.C. – In a historic settlement, Bank of America has agreed to pay $16.6 billion for financial fraud during the economic crisis, the U.S. Justice Department announced Thursday.
Federal officials said this is the largest civil settlement with a single entity in American history
The settlement is to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act or FIRREA, officials said.
The settlement will provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness.
The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from possible criminal prosecution.
“This historic resolution – the largest such settlement on record – goes far beyond ‘the cost of doing business,’” said Attorney General Holder. “Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”
This settlement is part of the ongoing efforts of President Obama’s to recover money on behalf of consumers and investors.
The Financial Fraud Enforcement Task Force and its Residential Mortgage-Backed Securities (RMBS) Working Group has recovered $36.65 billion so far.
“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General Tony West.
Adding, “But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.”