Bank of America Corp. said federal and state agencies plan to press more civil claims tied to mortgage and debt offerings, signaling the firm faces another round of legal battles tied to home loans and underwriting.
The U.S. Department of Justice and Securities and Exchange Commission may bring civil claims on securitizations backed by jumbo mortgages, the bank said Thursday in a regulatory filing. The SEC also could take action on Merrill Lynch’s sales of collateralized debt obligations and New York’s attorney general may bring claims against Merrill over residential mortgage- backed instruments, the firm said.
The bank “has been in active discussions with senior staff of each government entity in connection with the respective investigations and to explain why the threatened civil charges are not appropriate,” the Charlotte, North Carolina-based lender said. It’s ranked second by assets among U.S. banks.
A new set of lawsuits could set back Chief Executive Officer Brian T. Moynihan’s effort to escape fallout from the credit crisis and cap costs stemming from purchases of Countrywide Financial Corp. and Merrill Lynch & Co. The bank has already spent more than $45 billion on litigation, settlements and refunds to investors tied to home lending. Moynihan said this year he wants to “get these legacy issues put behind us.”
“We’ve made progress resolving many issues and will continue to work to address any outstanding matters,” said Larry DiRita, a Bank of America spokesman. Florence Harmon of the SEC, Adora Jenkins of the Justice Department and Damien LaVera, a spokesman for New York Attorney General Eric Schneiderman, declined to comment.
Bank of America has said it received subpoenas and other information requests regarding mortgage securities and CDOs created during the housing boom. Schneiderman, who co-chairs a task force created to investigate misconduct in the bundling of mortgage loans into securities, accused Credit Suisse Group AG of deceiving buyers of the investments in a complaint he filed in November.
Bank of America also said it will record a $1.1 billion charge to income-tax expense stemming from a 3 percent reduction in the U.K. corporate tax rate to 20 percent. While this will benefit the company in future years, the lower rate also affects the value of deferred tax assets, according to the filing.
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