Several US banks have already reached settlements over the sale of dodgy mortgage-backed securities, the asset class which played a crucial part in the financial collapse.
Bank of America – which ended up buying floundering businesses Merrill Lynch and Countrywide at the height of the crisis – had reportedly been pushing for a smaller penalty, on the basis the sales were carried out by the two companies above, rather than itself.
Indeed the bulk of mortgage-backed securities credited to Bank of America were in fact issued by Countrywide. However, the government has been firm in its demands, warning Bank of America it could issue further lawsuits against its subsidiary companies.
Should the deal be finalised, the bank will pay roughly $9bn to government entities, while the additional money will go to relieving struggling homeowners and other consumers.