Bank of America Raises Its Mortgage ‘Settlement’ Offer
“It was from start to finish the vehicle for a brazen fraud by the defendants,” Judge Rakoff wrote in a 19-page opinion, “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”
Bank of America Raises Its Mortgage Settlement Offer
Bank of America and federal prosecutors have accelerated their negotiations to resolve an investigation into the bank’s sale of troubled mortgage securities before the financial crisis. The two sides, however, remain far apart on crucial issues and a settlement remained elusive late Wednesday, even after the bank significantly raised its offer.
The bank’s lawyers and Justice Department prosecutors met in Washington on Wednesday to discuss the size of a potential cash penalty, a major sticking point in the settlement talks, according to people briefed on the meeting. Heading into the meeting, the Justice Department was demanding roughly $17 billion to settle the case, more than $10 billion in the form of a cash penalty and the rest in so-called soft dollar payments to help struggling homeowners.
The bank was offering a total of $13 billion, the people said, including $4 billion in cash. The bank narrowed the gap on Wednesday, the people said, raising its cash offer to about $7 billion and its total proposal to roughly $14 billion.
But the Justice Department, which has measured the success of its mortgage cases largely on the size of cash penalties, has balked at the offer. If a deal is not reached in the coming days, the Justice Department might announce a lawsuit against the bank.