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BofA settles Countrywide investors claims


BofA settles Countrywide investors claims


Bank of America is to pay $8.5 billion (5.9 billion euros) to a group of investors to settle a claim over bonds based on sub-prime mortgages which slumped in value when the housing market collapsed..

The bonds were issued by Countrywide, one of the most notorious lenders during the sub-prime scandal.

Bank of America became liable after it bought Countrywide in 2008 and said this settlement removes uncertainty for the future. Wall Street agreed and the bank’s shares rose, along with others in the financial sector.

The largest US bank by assets also said it intends to record an additional $5.5 billion (3.8 billion euros) provision for its exposures on the matter in the second quarter of 2011.

The settlement is the largest such sum in the banking industry to date.

The group that lost money on the Countrywide investments includes BlackRock, MetLife and the Federal Reserve Bank of New York.

The settlement reportedly extends beyond the case brought by the initial group of investors and could resolve “significant parts” of the bank’s exposure to repurchase claims from private investors.

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