Bank of America has agreed to pay $17 billion to settle federal investigators’ allegations that it sold shoddy mortgage-backed securities ahead of the financial crisis, according to a media report.
Bank of America will pay $10 billion in cash and $7 billion in consumer relief as part of the settlement agreement, the Associated Press reported, citing unidentified sources. The settlement agreement between B of A and the Justice Department is expected to be announced as early as Thursday.
B of A spokesman Lawrence Grayson declined to comment on the report.
The Charlotte, N.C., company will be required to acknowledge making misrepresentations about the quality of its mortgage-backed securities, AP said.
The settlement has long been rumored as forthcoming, with recent estimates for Bank of America’s settlement price varying from $16 billion to $17 billion.
Citigroup last month agreed to pay $7 billion to settle a Justice Department investigation into its sales of mortgage-backed securities. JPMorgan Chase agreed in November to pay $13 billion to settle state and federal probes of its sale of mortgage securities; at the time it was the largest settlement involving a financial firm and the federal government.
Bank of America has already been forced to pay billions to settle other investigations, including a probe into the so-called Hustle program at its Countrywide mortgage unit.