MOSCOW, August 21 (RIA Novosti) – Bank of America, the nation’s second largest lender, has reached an agreement with the US Justice Department to pay a record $16.65 billion settlement for selling flawed mortgage securities, Attorney General Eric Holder said in a statement Thursday.
“This historic resolution — the largest such settlement on record — goes far beyond ‘the cost of doing business,’” Holder said in a statement posted on the US Justice Department webpage.
The US lender will pay $9.65 billion in cash and $7 billion in loans and refinanced mortgages 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,” the Justice Department said.
The settlement is one of the latest attempts by the US legal authority to penalize the behavior that caused the 2008 financial crisis, such as knowingly giving loans to borrowers who could not afford them and then reselling those toxic mortgages to unwitting underwriters.
So far, President Barack Obama's Financial Fraud Enforcement Task Force has gathered $36.65 billion from guilty banks to give the money back to consumers and investors who were misled by these financial institutions.