According to the NY Times, Bank of America is completing an agreement to pay $8.5 billion to settle a lawsuit by investors who purchased mortgage securities that soured when the housing bubble burst, representing what is likely to be the single biggest settlement tied to the subprime mortgage boom and the subsequent financial crisis of 2008.
The settlement would wipe out all of the company's earnings in the first half of this year, while encouraging powerful private investors to extract payouts from other banks that bundled troubled home loans and sold them as sound investments.
"I think this is huge," said Michael Mayo, a bank analyst with Credit Agricole in New York. "It's about time the industry resolves issues from the financial crisis and focuses more on righting their companies and improving the economy. This is the most significant step since the financial crisis that helps do that."
The proposed settlement is with a group of large investors including Pimco and BlackRock, as well as the Federal Reserve Bank of New York. Together they hold roughly $56 billion in mortgage-backed securities from Bank of America, based in Charlotte, N.C.
http://seattletimes.nwsource.com/html/businesstechnology/2015453472_banksettle29.html
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