Page 18 - Bank of America E Case Study

"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.