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VOL. 126 | NO. 238 | Wednesday, December 07, 2011

Bank of America Settles Mortgage Suit for $315M

AP

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NEW YORK (AP) – Bank of America agreed to pay $315 million to settle claims by investors that they were misled about mortgage-backed investments sold by its Merrill Lynch unit.

The settlement was disclosed in court papers filed late Monday in U.S. District Court in Manhattan and requires the approval of a judge.

The class action lawsuit was led by the Public Employees' Retirement System of Mississippi pension fund. The fund claimed that the investments were backed by poor quality mortgages written by subprime lenders Countrywide Financial Corp., First Franklin Financial, and IndyMac Bancorp, a bank that failed in 2008.

The settlement represents another attempt by Charlotte, North Carolina-based Bank of America Corp. to put its legal issues behind it. In the first half of the year alone the bank put up $12.7 billion to settle similar claims from different groups of investors.

U.S. District Judge Jed Rakoff has to approve the settlement, something that could prove difficult since the settlement includes no admission of guilt from Bank of America.

Just last week, Rakoff struck down a $285 million settlement that Citigroup Inc. reached with the Securities and Exchange Commission. The settlement would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors.

Rakoff said the public has a right to know what happens in cases that touch on "the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives." In such cases, the SEC has a responsibility to ensure that the truth emerges, he wrote.

In 2009, Rakoff had rejected a $33 million settlement between the SEC and Bank of America on similar grounds, calling it a breach of "justice and morality."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 64 324 13,221
MORTGAGES 107 477 17,235
FORECLOSURE NOTICES 20 82 3,380
BUILDING PERMITS 0 366 30,930
BANKRUPTCIES 67 276 12,619
BUSINESS LICENSES 22 87 4,576
UTILITY CONNECTIONS 71 487 19,380
MARRIAGE LICENSES 28 122 4,031

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