DOJ Announces Record $16.7 Billion Mortgage Settlement With Bank Of America: Live Feed

Tyler Durden's picture

It was in June of 2011 when we reported that Bank Of America agreed to pay $8.5 billion to settle mortgage (mis)representation suit, where we said the bank was "about to part with more money than it has earned since 2008 in what will soon be the biggest financial settlement in the industry." Fast forward 3 years later when Bank of America once again makes history with its latest, and literally greatest, mortgage settlement with the US government, putting all of its MBS transgressions in the past, and which will cost the bank some $16.65 billion (of which, however, some $7 billion will be "consumer relief" and the remainder, which will have a cash portion consists of $5.02 billion in civil monetary penalty, including $4.63 billion in compensatory remediation payments, likely tax-deductible), a new record, and allow the bank to continue adding back "one-time, non-recurring" litigation charges to its adjusted, non-GAAP bottom line, thus once again "beating expectations".

Eric Holder has had a busy week - solving Ferguson's problems yesterday to record penalties for BofA today:

  • BOFA AGREES TO PAY $16.65 BILLION TO END U.S. MORTGAGE PROBES
  • BOFA U.S. SETTLEMENT INCLUDES $7 BILLION IN CONSUMER RELIEF

However...

  • BOFA: SETTLEMENT DOESN'T COVER POTENTIAL CRIMINAL CLAIMS

At this point it is probably worth recalling what we wrote last week, namely that The Price To Keep Bankers Out Of Jail, is now $110 Billion And Rising:

Six years after the greatest financial crisis in modern history, not a single prominent - and bailed out - banker (or frankly any for that matter) has gone to prison. Still, in the great squid pro non-jail quo, regulators and the DOJ have had to be appeased somehow. That "somehow", as has been revealed over the past several years, is with quarter after quarter of massive legal charges, settlements, penalties and so on. Of course, since the banks wouldn't exist in the first place if it wasn't for a multi-trillion taxpayer bailout, they don't mind because the math is quite simple: being converted into a government utility is better than being bankrupt anyday. Also, it is shareholder money, not an actual clawback (oh, the horror).

 

So what is the total amount of shareholder (and by implication, taxpayer) money that has been spent by the bankers to distract regulators and the "cops" from not jailing a single one of them? According to the following chart from the WSJ, just the six biggest offenders have spent over a whopping $110 billion to keep the government happy and the US prison population in check.

 

 

Here, one could add a tangent, that the more money spent on settlements by any given bank, the more in need of a bailout it was in the first place. In which case one dreads to think just how bankrupt Bank of America will be when the next inevitable crisis hits, and how many trillions in taxpayer bailout funds it will need next time around...

And while in the past banks have gotten away without admitting or denying guilt, in this case things are different:

Bank of America admits to the facts set forth below and acknowledges that its conduct violated the federal securities laws.

Click image for live feed from Bloomberg (no embed)

Full SEC Statement:

Bank of America Admits Disclosure Failures to Settle SEC Charges
Bank Also Resolves Separate SEC Case in $245 Million Settlement

 

Washington D.C., Aug. 21, 2014 — The Securities and Exchange Commission today announced a settlement in which Bank of America admits that it failed to inform investors during the financial crisis about known uncertainties to future income from its exposure to repurchase claims on mortgage loans.

 

Bank of America also is resolving securities fraud charges that the SEC filed last year related to a residential mortgage-backed securities (RMBS) offering.

 

Bank of America has agreed to settle the two cases by paying $245 million as part of a major global settlement announced today by the U.S. Department of Justice in which Bank of America will pay $16.65 billion to resolve various investigations involving violations of laws regulated by other federal agencies.

 

“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, regional director of the SEC’s Atlanta office.  “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”

 

In new charges filed by the SEC today in a settled administrative proceeding, Bank of America admits that it failed to disclose known uncertainties regarding potential increased costs related to mortgage loan repurchase claims stemming from more than $2 trillion in residential mortgage sales from 2004 through the first half of 2008 by the bank and certain companies it acquired.  In connection with these sales, Bank of America made contractual representations and warranties about the underlying quality of the mortgage loans and underwriting.  In the event that a loan buyer claimed a breach of a representation or warranty, the bank could be obligated to repurchase the related mortgage loan at its outstanding unpaid principal balance.

 

According to the SEC’s order, Regulation S-K requires public companies like Bank of America to disclose in the Management’s Discussion & Analysis (MD&A) section of its periodic financial reports any known uncertainties that it reasonably expects will have a material impact on income from continuing operations.  Bank of America failed to adhere to these requirements by not disclosing known uncertainties about the future costs of mortgage repurchase claims when filing its financial reports for the second and third quarters of 2009.  These uncertainties included whether Fannie Mae, a mortgage loan purchaser from Bank of America, had changed its repurchase claim practices after being put into conservatorship, the future volume of repurchase claims from Fannie Mae and certain monoline insurance companies that provided credit enhancements on certain mortgage loan sales, and the ultimate resolution of certain claims that Bank of America had reviewed and refused to repurchase but had not been rescinded by the claimants.

 

In the SEC’s original case against Bank of America filed in August 2013, the agency alleged that the bank in its own words “shifted the risk” for losses to investors when it failed to disclose that more than 70 percent of the mortgages backing the RMBS offering called BOAMS 2008-A originated through its “wholesale” channel of mortgage brokers unaffiliated with Bank of America entities.  Bank of America knew that such wholesale channel loans – described internally as “toxic waste” – presented vastly greater risks of severe delinquencies, early defaults, underwriting defects, and prepayment.

 

As part of the global settlement, Bank of America agreed to resolve the SEC’s original case by paying disgorgement of $109.22 million, prejudgment interest of $6.62 million, and a penalty of $109.22 million while consenting to permanent injunctions against violations of Sections 5, 17(a)(2), and 17(a)(3) of the Securities Act of 1933.  The settlement is subject to court approval.  To settle the new case, Bank of America agreed to pay a $20 million penalty while admitting to facts set out in the SEC’s order, which requires Bank of America to cease and desist from causing any violations and any future violations of Section 13(a) of the Securities Exchange Act of 1934 and Rules 12b-20 and 13a-13.

 

The SEC’s investigation into Bank of America’s MD&A-related violations was led by Mark A. Troszak, Kristin B. Wilhelm, and Peter J. Diskin in the SEC’s Atlanta office.  The investigation into Bank of America’s RMBS-related violations was led by Mark Eric Harrison and Aaron W. Lipson, and the litigation was led by Ms. Wilhelm with assistance from Mr. Harrison.  The investigations were supervised by Ms. Dignam and William P. Hicks, associate regional director for enforcement in the Atlanta office.  The SEC appreciates the assistance of the Justice Department and the U.S. Attorney’s Office for the Western District of North Carolina.

Full SEC Charge:

 

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ekm1's picture

BAC is insolvent and has got no money, as most other primary dealers


BAC, as all others which are insolvent also, will use excess reserves from the Fed to make payments.

 

This is just theater

y3maxx's picture

...and a new University is named in Washington DC..."The Mozilo and Corzine School in WFE Economics". We f*ck everyone

Christophe2's picture

In addition, the billions will just go from 'bank' to 'government' to be used in wars and repression.

How much of that money will the victims of these FINANCIAL crimes ever see?  The $ is not for them (obviously).  It's just a facade to make it seem like the banksters' gov is being 'tough' on the banksters' biz, when in fact it's just two of their joints swapping assets and continuing business like before.

smithcreek's picture

That is one sweet money laundering operation the government has going.

Four chan's picture

i just short sold my house, it took 6 months and wiped out 70k in debt. thats the kind of settlement every american needs.

WillyGroper's picture

Wait till you get the tax bill.

Boxed Merlot's picture

get the tax bill...

 

Hey, what's a 70K bump in income among friends?  Instead of owing 70K to an institution incapable of establishing legitimate standing to collect, you can now owe 30K to Lois Lerner and associates.  You can bet she'll never relinquish the right of ownership.  And take heart, it'll be back to 70K and counting once you claim your inability to service the debt.

Dr. Richard Head's picture

No shit.  Bank creates mortgage debt with a flick of the pen thanks to fiat fractional reserve banking, collects payments and front loaded interest from "customer", sells that same mortgage 10 times, or more, over and keeps all of the proceeds.  Bank somehow gets into trouble after collecting all of these payments and interest, DC funnels currency (created out of nothing and future debt) to the bank to bail it out.  Bank gets sued and takes some of that currency and funnels it back to the DOJ.  Meanwhile, ZIRP, QE, Discount Window Operations, and other assorted machinations funnel currency from Fed to bank so bank can buy US bonds and sell them back to the Fed and pockets the difference.  What a crock of shit. 

F.A. Hayek's picture

The only part you left out was funding the government to shelter, feed and provide mobile communications to the FSA, who would in turn vote for more thieving politicians to continue the cycle.

cockroachfuture's picture

yes because if Tyrone isnt cool with the above system, it wouldnt happen. Im sure they consulted Da Shawn and Monique before they put this con into effect.

How retarded are you? Do you really think the FSA or ANY other plebs have any power over Banks doing what banks were designed to do?

 

HardAssets's picture

Don't forget all those 'working' for government, including those in the 'private sector' living off of government contracts spread among districts throughout the country.

HardAssets's picture

@ Dr Richard Head - Now go try to explain that to your neighbor, or sister, or the cop on the street.

John Maynard Keynes :
"Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose."

Chupacabra-322's picture

Financial Crimes? Fuck that. How about War Crimes, Crimes Against Humanity, Crimes against The Ameriacn People followed up by Financial Terrorism Crimes for starters.

Woodyg's picture

Some rich jerkoff once famously said Corporations are People my friends"

And in many states it's three strikes and you're in jail for life 

Here the criminal banks just keep breaking the law and wheres the Life in Prison or the Death Penalty?

So corps arent people- they're worth More than people. 

McCormick No. 9's picture

Looks like BofA got thrown in the briar patch.

There is a God, before whom these fuckers must give a account of themselves.

LongMarch's picture

How come that guy in Ferguson didn't get a chance to just pay a fine?

TuPhat's picture

Duh, he wasn't a financial criminal.  Learn the difference your life might be in the balance.

Chupacabra-322's picture

You mean bail & probation, attorney fees, that is, if he could of afforded one. Na, its just cheaper these days to have the Criminal UNITED STATES, CORP. INC Pinkertin Thugs Execute us one by one in our own streets these days.

Fits in perfectly with the whole Global Depoplution Agenda scheme as well.

- "All done by Design, all done by Agengda."

- Chupacabra

F.A. Hayek's picture

Where's the god that holds accountable lying, thieving, social engineering politicians who are the root cause of this? This is not to say that the financial industry was not all-too-willing culprits in the great heist, they most certainly were.

Dr. Richard Head's picture

As the Metal Band Cattle Decapitation would say, "Fuck God".  http://vimeo.com/56447021

 

cahadjis's picture

There isn't. Which is why we need to make them accountable here, on earth, asap. Not pray - act.

JRobby's picture

Not quite yet.

Hoping that movie is in the "coming soon" schedule though

 

exi1ed0ne's picture

It's nice that they stuck them with a big fine.  How much of that is going to the people they (and Countrywide) fucked over?

Crickets.

ekm1's picture

Agree. Yes, money from Fed excess reserves to insolvent oligarchs who refuse to lose.

 

Watch out for bullets going through heads, soon, if this continues

Patriot Eke's picture

I had a mortgage that was Countrywide then BoA, and they surprise foreclosed on me even though I was in the "Approved Shortsale Program" of BoA.  The bank was given nine good offers, and they refused them all.

It has been over two years now, and I still get the LoC statements from the second mortgage.  On my credit it supposedly says the debt has been charged off / settled.  I can go out and get another mortgage already apparently, but I'm still waiting for the market to drop due to higher rates.

In the past I have received two checks related to wrongdoing on the part of BoA, so I'm not sure if this latest news will add to it.  Those two checks were around 2K and 3K.  While I lived in the place that the bank owned, I gave them nearly 150K over five years for a place that went from 384K to 130K in value.  I did not squat in it, and I gave up the place as soon as I stopped paying for it.  There's not an ounce of guilt on my part either.  They got a ton of my money after all and surprise foreclosed on me even though I was doing everything by their rules.

People have received compensation however.  I did not buy the place as a sub prime either, and I paid my bills as I agreed until I could no longer do it.  My reason?  I went from single to married with multiple children, and my wife had MASSIVE medical issues that resulted in equally massive bills.  We were going under and had to move no matter what.  If I could have sold the place in a better way, I gladly would have too.

lordbyroniv's picture

I hope this means my cunt sister in law

who BAC has decided to not kick out of her home

 

will finally get kicked out

 

She has not paid the mortgage since 2008

 

and she still is living there

 

Why didnt IIIIIIIIII buy a house I couldnt afford???

 

I am such a stupid fool.

 

:(

Ban KKiller's picture

Good on her. You, not so sure about. No real party of interest to make valid claim against her. She turned out to be ahead!

lordbyroniv's picture

so you like people who are idiots to have benefitted for their idiocy?

 

how is that fair to me????

 

I pay $1200 rent every month

 

she got a free house !!!

JRobby's picture

If you wish to be happy, joyous and free, accept the realities and inherent ironies that are involved in this slow steady collapse of our society.

You must be happy with yourself and your own actions, not the actions of others.

F.A. Hayek's picture

The drum circle on the San Francisco bay must have conjured good chakra today.

Billy Sol Estes's picture

One of the funniest posts on ZeroH was the average time you could spend in a house without paying the mortgage, by state. 

Comedy Gold for a Funny Nation.

lordbyroniv's picture

My cunt sister inlaw is in NY

 

Her mortgage was $1500 a month

 

Thats $1500 * 12 months * 6 years

 

Thats $108,000 she has saved / made !

 

Wanna hear something truly aghast

 

She even stopped paying her HOA dues !!!  Fucking idiot.

And after 6 years,...the development brought her to court.

 

And the judge dismissed the developers claim...because of laches [delayed prosecution] !!!!!

 

So my cunt sister in law said ..afterwards......

 

I SWEAR TO GAWD...

 

"So,...

 

does this mean I dont have to pay anymore?"

 

That was her response!!!

 

Any more?  More?  She hasnt paid shit for 6 fucking years.

 

PS- BanKiller....I think you are a piece of shit.  You say 'Good on her'.  I hope you are in her complex and all YOUR HOA dues go up because you are now forced to foot her bill.  YOU ARE EITHER A CLUELESS DOLT AND DO NOT GET IT or some anarchist dipwad who has no idea wht he wishes for. 

 

 

JRobby's picture

If you wish to be happy, joyous and free, accept the realities and inherent ironies that are involved in this slow steady collapse of our society.

You must be happy with yourself and your own actions, not the actions of others.

lordbyroniv's picture

Yes yes

 

THERE IS NO SPOON

 

But seriously though...

 

I HAVE A RIGHT TO BE PISSED !!!!!!!!!!!!!!

JRobby's picture

Actually, you are incorrect.

Bay of Pigs's picture

+1 He is wrong. If the banks are the crooks who created this massive fraud, why is he blaming those who figured it out and said fuck you? It was game over when the SHTF in 2008/2009 and the trillions poured into the banks via the FED. Suspending FASB 157 was the end of the line for accounting and any integrity in valuations. There is no going back now.

lordbyroniv's picture

Nobody figured ANYTHING out.

 

You make it seem like people who stumbled into a good thing are smart

 

They are idiots

 

THIS IS CALLED INCENTIVES PEVERSE U MORON !!!

 

ONLY PERSON WHO LOSES IS THE HONEST, HARD WORKING, SMART PEOPLE.

Bay of Pigs's picture

Bullshit. Wake up. The only moron around here is you yelling at people, and calling people names.

We all lose in the end because of the FED driven TBTF bailouts and fraud ridden and corrupted markets. 

shovelhead's picture

Don't you think that not being angry and hateful might take some of the joy out of life?

lordbyroniv's picture

You do realize your sentence with the word 'NOT' results in the exact opposite meaning of what you are trying to say?

 

ps - you dont know me and my level of anger.  i am merely expressing disgust at inequity.  I have the right to do such without all the hippie turn the other cheeck psycho shit being thrown at me.

 

---------------------------

 

Don't you think that not being angry and hateful might take some of the joy out of life?

JRobby's picture

I know you very, very well. I used to be you.

JRobby's picture

There was no accident. I chose to do the things that I did.

WillyGroper's picture

What kinda dolt buys a place with HOA anyway?

It's nothing more than another skimming operation.

lordbyroniv's picture

Agreed

 

mydumbass  cunt sister in law

 

 

Life of Illusion's picture

 

They decided to buy toxic shit in the first place it all should have gone down burning the bond holders cleaning the system.

No,no,no this is their financial stability with BS fines and a debt jailed public as economy goes nowhere.

 

 

what's that smell's picture

Customer Relations
Barclays Bank Plc

Leicester LE87 2BB 

26 August 2011 

Sort Code: XX-XX-XX
Account Number: XXXXXXXX
Account Name: XXXXXXXX

Dear Sir or Madam

 As a Barclays customer, I was disgusted to read the recent articles in the i newspaper regarding your involvement in funding companies that manufacture CLUSTER BOMBS (or any arms for that matter). This is a very serious issue to me (and for many others, I know), compounded by the financial climate in which we live, when our banks and bankers are gambling with peoples lives as well as their money.

 ‘In April 2009, Barclays and HSBC were involved in a major financing deal with Textron, a US arms manufacturer that builds a “sensor fused weapon” – the world’s most powerful cluster bomb… Textron issued $757.4m worth of bonds and shares with the financial aid of a 10-bank syndicate. HSBC and Barclays combined underwrote $44.6m worth of loans. Barclays then went on to invest a further $75m in a separate Textron bond deal five months later.’ – www.independent.co.uk

 As a result of these revelations, I am seriously considering closing my account with you at the soonest opportunity and will encourage others to do so, as I do not want to be associated (however remotely) with such hideous weapons!

 Under the Freedom of Information Act (2000), can you confirm to me whether or not Barclays continues to finance companies that manufacture cluster bombs and/or other types of arms? What measures are you taking to ensure that this does not happen in the future, if any? And what are you doing to claw back the money you have contributed to the murder (and maiming) of innocent men, women and children across the world? Do you plan to reinvest this money into charities that help victims of war? Or are you just part of the war machine, only interested in lining your own pockets, no matter what the cost to people’s lives?

 Yours faithlessly

 XXXXXXXX