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Bank of America Nears Settlement with Justice Department on Countrywide Probe

Strategic Insights

— 1 min read

Bank of America Corp., the second-largest lender in the US, is on the verge of settling a high-profile probe into whether its Countrywide Financial unit violated fair-lending practices. The settlement, reportedly in the works with the US Justice Department, would make Bank of America the largest financial institution to settle a case with the department's new fair-lending unit. The deal may be announced as early as this week, according to sources, and would involve compensation for Countrywide customers. This development comes as Bank of America's stock price hovers near a year-low of $4.92.

Key Takeaways:

  • Bank of America is on the brink of settling a US Justice Department probe into Countrywide Financial's fair-lending practices.
  • The settlement would make Bank of America the largest financial institution to settle a case with the department's new fair-lending unit.
  • The deal may involve money to compensate Countrywide customers, with a potential announcement as early as this week.
  • Bank of America acquired Countrywide in 2008, inheriting billions of dollars in mortgage liabilities.
  • The settlement is a critical development in the bank's ongoing efforts to address past regulatory issues.
  • Countrywide's history of steering borrowers toward higher-cost loans has been a focal point of the probe.
  • The Justice Department's fair-lending unit was established in 2011 to combat discriminatory lending practices.

Statistics:

  • Bank of America's stock price is down 1% at $4.92, nearing a year-low.
  • The bank acquired Countrywide in 2008, inheriting $1.9 trillion in mortgage liabilities at the time of the acquisition.
  • The Justice Department's fair-lending unit was established in 2011 to combat discriminatory lending practices.
  • The number of Americans who received Countrywide mortgages is estimated in the tens of thousands.

Sources:

  • Bloomberg News (no date provided)
  • MidnightTrader.com via COMTEX (Dec 21, 2011)
  • Comtex News Network, Inc. (www.mysmartrend.com, 2004-2011)

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