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Bank Of America To Pay $20 Billion To Settle Crappy Mortgage Investments

Bank of America is expecting to eat $20 billion in losses stemming from the bank's dealings in the subprime mortgage crisis several years ago. Investment firms, who bought portions of debt based on a raft of dubious mortgages thanks in part to BOA's acquisition of shady lender Countrywide, had demanded reparations after the bubble burst. Last fall, CEO Brian Moynihan challenged the investors' attitude of, "I bought a Chevy Vega but I want it to be a Mercedes," and told shareholders that he was going to "protect" them and engage the investors in "hand-to-hand combat." Sure, BOA might have lost $20 billion, but you shoulda seen BlackRock Financial's shiner!

Now it appears the fighting rhetoric is gone, and the move is part of a campaign of CEO Brian Moynihan to "move past the mortgage crisis." Reuters reports that despite the expected loss, shares of the bank were up 3 percent today, and that can absorb the $20 billion thanks to the $67 billion it has in available capital. BOA's move now puts pressure on other banks, like JPMorgan Chase and Wells Fargo to clean their own mortgage messes up. "Our job is to eliminate risks to allow this company to go forward." BOA is not out of the weeds yet thanks to then-Attorney General Cuomo's lawsuit, but the market doesn't seem concerned about the bank's future. In other words: $20 billion is simply the cost of doing business.

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Comments [rss]

  • right...after recession..i am afraid of American banks... basement ideas

  • m015094

    Where is the responsibility of the homeowners who took loans that they couldn't afford?

  • edgie168

    right where the tech bubble is

  • Colonel_Ingus

    Billion, million, schmillion.  Not even super sharp Gothamist can keep them straight.

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