Bank of America Corp (NYSE:BAC) agreed to pay regulators $165 million to settle charges that the bank and its subsidiaries - Countrywide and Merrill Lynch - sold flawed mortgage-backed securities to big credit unions. The National Credit Union Administration, which regulates U.S. credit unions, had charged the Bank of America Corp. (NYSE:BAC) to recover losses suffered by five failed corporate credit unions. The wholesale credit unions or corporates are backup banks for smaller credit unions that directly serve the public.
According to Reuters report, neither side admitted any wrongdoing in settling the claims. Bank of America Corp. (NYSE:BAC) said it didn't misrepresent the soundness of the mortgage-backed securities. The Charlotte, N.C.-based bank is facing several lawsuits from various parties over investment in mortgage securities during the financial crisis. The bank said it will pay NCUA from reserves it has already built to settle claims. The National Credit Union Administration declined to provide any details about the deal, and didn't release the settlement papers.
The regulator has already settled similar charges against Deutsche Bank Securities, Citigroup Inc (NYSE:C) and HSBC Holdings plc (NYSE:HBC) (LON:HSBA) for a total of $170.75 million. Bank of America Corp (NYSE:BAC) preferred to settle the claims even before NCUA filed a lawsuit. BofA has poured in over $10 billion to settle mortgage claims related to its subsidiary Countrywide Financial Corp.
The National Credit Union Administration earlier objected to a $8.5 billion settlement between Bank of America Corp (NYSE:BAC) and firms that invested in toxic securities. However, the regulator withdrew its notice of intent to object to the $8.5 billion settlement which is yet to be approved by the New York state court. NCUA didn't give a reason for the change.
The regulator has sued 10 banks for selling toxic mortgage-backed securities to corporate credit unions that couldn't bear the losses and collapsed. Those banks include Credit Suisse Group AG (NYSE:CS), Barclays PLC (NYSE:BCS) (LON:BARC), JPMorgan Chase & Co. (NYSE:JPM), Goldman Sachs Group, Inc. (NYSE:GS) and Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBS).
Bank of America Corp (NYSE:BAC) shares were up 0.29 percent to $12.19 at 1:19 PM EDT.