Page 191 - Bank Case Studies

Just prior to this investment BofA’s Chairman and CEO, Brian

Moynihan, had told BofA investors that it did not need to

raise capital.

In July 2014, the DOJ and BofA reached a $16.65 billion

settlement over the “toxic” mortgage claims for state and

federal claims relating to the practices of Merrill Lynch and

Countrywide in the runup to the financial meltdown. The

amount was made up of about $10 billion in cash payments

and $7 billion in so-called mortgaged relief to consumers.

This resolution was the largest such settlement on record
and went far beyond “the cost of doing business”. Attorney

General Eric Holder said:

““Under the terms of this settlement, the bank has

agreed to pay $7 billion in relief to struggling

homeowners, borrowers and communities

affected by the bank’s conduct. This is appropriate

given the size and scope of the wrongdoing at

issue,” he concluded. It’s the third major

settlement that the Obama administration has

reached with a Wall Street bank over the financial

crisis, following similar agreements with Citigroup

and JPMorgan Chase”. (4)

This was followed in December 2014 FINRA fined Merrill

Lynch $4 million as part of a case against ten investment

banks for allowing their stock analysts to solicit business
and offer favourable research coverage in connection with a

planned initial public offering of Toys R Us in 2010.