Page 190 - Bank Case Studies

"It is quite something else for the very

management that is accused of having lied to its

shareholders to determine how much of those

victims’ money should be used to make the case

against the management go away," ... "The

proposed settlement," the judge continued,

"suggests a rather cynical relationship between

the parties: the S.E.C. gets to claim that it is
exposing wrongdoing on the part of the Bank of

America in a high-profile merger; the bank's
management gets to claim that they have been

coerced into an onerous settlement by

overzealous regulators. And all this is done at the

expense, not only of the shareholders, but also of

the truth."(18)

However, these fines paled into insignificance against the

$40 billion, climbing ultimately to more than $45 billion, that

the Wall Street Journal reported to be associated with real

estate losses, legal expenses and settlements with state and

federal agencies that Merrill’s mortgage-related business

incurred. (8)

Some respite for BofA came when “It also got a private

bailout in the form of a $5 billion capital infusion from

Warren Buffett in 2011” saying that it was well managed. (2)

Although Buffett’s $5 billion counted as Tier 1 Capital, BofA’s

share price and the market reacted as if the infusion was
debt rather than capital.