Bank of America is close to a deal with the US Justice Department to pay more than US$16 billion to settle investigations into its sale of toxic mortgage securities mortgage probes.
The bank has agreed to pay roughly US$9 billion in cash to the federal government, states and other government entities as part of an overall pact that could be finalized this month, people familiar with the matter told the Wall Street Journal.
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Additional money would be aimed at consumer relief, such as reducing mortgage balances for struggling homeowners.
Federal prosecutors have been investigating Bank of America over its acquisitions of Countrywide Bank and investment firm Merrill Lynch, which together held about US$965 billion in mortgage-backed securities.
The securities included subprime home loans taken out by homeowners who were unable to maintain the payments. The poor quality of the loans led to huge losses for investors who bought mortgage-backed securities, as well as a wave of foreclosures on delinquent homeowners.
If finalized, the deal would be the largest penalty ever paid by a single company, topping the US$13 billion settlement that JPMorgan Chase reached with the department last year over similar charges.
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By GlobalDataBank officials were not immediately available for comment.
