Bank of America offers $17 billion to settle mortgage fraud case

<p>The bank wishes to settle a US investigation into its sale of mortgage-backed securities.</p>

Bank of America has agreed to the largest settlement in the history of corporate America.

The deal would cost Bank of America between $16 billion (£9.5 billion) and $17 billion to settle investigations into its sale of toxic mortgage securities before the financial crisis, according to an anonymous source familiar with the matter quoted by Bloomberg.

Under the proposed terms, the bank would pay about $9 billion in cash and the rest in consumer relief to settle federal and state claims. However, the exact details of the proposed accord are still being negotiated, the source said.

Bank of America and firms it acquired issued about $965 billion in mortgage backed securities between 2004 and 2008. 

About $245 billion in securities have defaulted or become delinquent, though Bank of America only accounted for four per cent of those, the news source reports. The agreement, if finalised, would follow Citigroup Inc.’s $7 billion settlement in July and JPMorgan Chase & Co.’s $13 billion deal in November.

It comes a day after Standard Chartered warned it could face a second US fine over its money-laundering controls, with regulators identifying new problems with the bank's surveillance system.

A spokesperson for Standard Chartered said the financial institution "can't give any certainty on the level of the monetary penalty," but that it expected the fine to be less than $340 million.

Recently, many banks have been dealing with issues with the US authorities, with HSBC, Barclays, UBS and BNP Paribas all hit. The latter was fined $9 billion last month for breaching sanctions related to Sudan and Iran.

Bank of America Corp's shares were up 0.33 per cent to £15.25 at 09:51 ET today (August 7th) in New York.

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