Bank of America has agreed to pay $16.65bn to resolve allegations that it sold toxic mortgage-backed securities and other financial products in the lead-up to the financial crisis.
The deal calls for the bank to pay a $9.65bn cash penalty, and provide $7bn of consumer relief to struggling homeowners and communities.
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Bank of America admitted having sold billions of dollars of risky mortgage-backed securities while concealing key facts about the quality of the underlying loans.
It also admitted to having made misrepresentations to Fannie Mae and Freddie Mac about the quality of loans sold to those government-controlled mortgage companies.
"This historic resolution — the largest such settlement on record — goes far beyond ‘the cost of doing business,"’ U.S. Attorney General Eric Holder said in a statement.
The bank said that the deal will likely reduce its third-quarter pretax earnings by $5.3bn, or about 43 cents a share after taxes.
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By GlobalDataThe fine comes after a series of similar deals over the mortgage-related conduct of major US banks ahead of the crisis.
In July, Citigroup agreed to pay $7bn to resolve its case while JP Morgan Chase reached a $13bn accord to conclude the investigations.
