Talks stalled on June 9 after the firm offered more than $12 billion to resolve the investigations, the newspaper said, citing people briefed on the matter. The department was yesterday moving to put the finishing touches on a civil complaint against the bank that would accuse it of selling mortgage investments that led to billions of dollars in losses, the Times said. The suit isn’t imminent, it said.
Bank of America, the second-biggest U.S. lender, is among at least eight banks under investigation by the Justice Department and state attorneys general for misleading investors about the quality of bonds backed by mortgages amid a drop in housing prices. Many of the loans in question were inherited by Bank of America when it purchased subprime lender Countrywide Financial Corp. and Merrill Lynch & Co., people familiar with the matter told Bloomberg News in April.
Prosecutors are seeking a bigger settlement amount from Bank of America than the record $13 billion agreed to by JPMorgan Chase & Co. over similar issues in November, according to the people.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment. Ellen Canale, a Justice Department spokeswoman, didn’t immediately respond to an e-mail seeking comment.
President Barack Obama ordered the creation of a task force in 2012 to coordinate probes of improper mortgage-bond underwriting by banks. Associate Attorney General Tony West has been overseeing the investigations and negotiations. Other banks that have faced scrutiny include Citigroup Inc., Credit Suisse Group AG and Wells Fargo & Co.
To contact the editors responsible for this story: Chitra Somayaji at email@example.com Russell Ward