NEW YORK (Worthy News)-- The largest single federal settlement in history, more than $16 billion, took place yesterday when Bank of America agreed to settle with the Federal government over toxic mortgage securities.
The tentative deal — which people briefed on the matter said would cost Bank of America more than $16 billion to settle investigations into its sale of toxic mortgage securities — started to take shape last week after the Justice Department rejected yet another settlement offer from the bank. Then, a wild card entered the fray.
Judge Jed S. Rakoff, a longtime thorn in the side of Wall Street and Washington, issued an unexpected ruling in another Bank of America case that eroded what was left of the bank’s negotiating leverage. Judge Rakoff, of Federal District Court in Manhattan, ordered the bank to pay nearly $1.3 billion for selling 17,600 loans, many of which were defective. Bank of America had previously lost that case, which involved its Countrywide Financial unit, at a jury trial. -- Source