Bank of America Corp (NYSE:BAC) is apparently in talks to end a Department of Justice inquiry into its mortgage backed securities business. The company, which announced its earnings for the first quarter of 2014 this morning, is apparently considering a multi-billion dollar settlement with the US government in order to end the investigation.
According to the report, which initially appeared on Reuters this afternoon, the company has held talks to resolve the probe into the sale of mortgage backed securities by Merrill Lynch, an arm of Bank of America Corp (NYSE:BAC) since 2009.
Bank of America talks to the DOJ
According to the report, the investigation is descended from a government task force that President Obama put into action in 2012 in order to investigate the abuses of mortgage backed securities that are blamed for the 2008 financial crisis. Bank of America Corp (NYSE:BAC) has already been involved in similar cases due to its acquisitions of Merrill Lynch, and Countrywide Financial.
No specific sum has been was reported, but it appears that both parties are serious about bringing the inquiry to an end. There are several reasons that Bank of America Corp (NYSE:BAC) should be happy to end its issues with regulators, and the Department of Justice may decide that it’s time to finish with the country’s number two bank – for the appropriate fee of course.
Bank of America tries to shed 2008 shadow
This morning’s earnings report showed that Bank of America Corp (NYSE:BAC) lost 5 cents per share in the first quarter of the year. Most of that loss resulted from a 40 cents per share litigation charge the bank took in the period. The firm said that it had set aside an additional $6 billion for litigation, a number higher than analysts were expecting.
Bank of America Corp (NYSE:BAC) is eager to put the past behind it, and the company has been trying to clear up cases relating to the financial crisis in recent weeks so that it might forge ahead with the business of the present. It doesn’t appear that process is going to be easy, but it’s possible that it might be quicker than expected if a settlement is actually in the works.
