Wednesday, June 11, 2014

Bank of America's Mortgage Settlement Deal Deadlocked

Superman Building Steven Senne/AP Bank of America and the U.S. Department of Justice have reached an impasse in negotiating a multibillion-dollar settlement deal related to the bank's mortgage investments, The New York Times reported, citing people briefed on the matter. The talks stalled Monday after the bank's latest offer of more than $12 billion to resolve state and federal investigations into its sale of mortgage investments fell far short of prosecutors' demands, the newspaper said. On Tuesday, as Bank of America (BAC) sought to continue negotiations, the Justice Department moved to put the finishing touches on a civil complaint against the bank, the report said, citing the people. The lawsuit, which isn't imminent, is expected to accuse the bank of selling mortgage investments that led to billions of dollars in losses. Reuters reported in April that Bank of America said in an annual regulatory filing that a U.S. Attorney's office advised the bank it would recommend the Justice Department bring a civil case against its affiliates over mortgage bonds. The second-largest U.S. bank faces multiple government probes over the underwriting, sale and securitization of residential mortgage bonds before the financial crisis. Representatives for Bank of America and the Justice Department didn't immediately respond to emails seeking comment outside regular U.S. business hours.

Swiss bank UBS blames a rogue trader at its London office for a $2.3 billion loss that is Britain's biggest-ever fraud at a bank. Kweku Adoboli, the 32 year old trader, is sentenced to seven years in prison. Britain's financial regulator fines UBS after finding its internal controls were inadequate and allowed Adoboli, a relatively inexperienced trader, to make vast and risky bets.

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