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March 27, 2014

BofA to pay $9.5 billion to settle Fannie Mae, Freddie Mac claims

“Putting to rest one of its biggest remaining headaches, Bank of America Corp. has agreed to pay $9.5 billion to settle claims by Fannie Mae and Freddie Mac.

“The government-sponsored mortgage finance giants had demanded compensation from the Charlotte, N.C., bank for losses on securities backed by faulty loans issued during the housing boom.

“The bank said the settlement, announced Wednesday, resolves all claims against BofA by the Federal Housing Finance Agency, the agency that regulates Fannie and Freddie.

“BofA already had suffered about $50 billion in losses and legal costs stemming from the mortgage meltdown in 2007 and the global financial crisis that ensued the following year — more financial damage than any other bank.”

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“Previous FHFA settlements included agreements with JPMorgan Chase & Co. ($5.1 billion), Deutsche Bank ($1.9 billion), Morgan Stanley ($1.25 billion), Union Bank of Switzerland ($885 million), Credit Suisse Holdings ($885 million) and Wells Fargo & Co., which reached a $335-million settlement with FHFA without having been sued.

“But even those massive figures don’t compare to the cumulative damage Wall Street firms inflicted on homeowners and borrowers during the crisis, said Dennis Kelleher, chief executive of Better Markets Inc., a liberal nonprofit focused on financial reform.

“Wall Street enriched itself on a massive fraudulent scheme that paid their bonuses and stuck the American people with the bill,” he said. “This settlement is just the latest in trying to recoup some of the fraudulent losses that the American people had to pay for, and on the economic side are still paying for.”

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Read full LA Times article here.

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