Bank of America has reportedly been working out a settlement deal with the Department of Justice over its mortgage-related misdeeds. Last week, the arrangement was for a rumored $12 billion at least. But the negotiations stalled out, and the two parties haven’t talked in a week or more. Apparently, the bank is blinking first, and trying to get the Attorney General back to the table.
As Reuters reports, BoA CEO Brian Moynihan has specifically requested a meeting with U.S. Attorney General Eric Holder. Holder’s folks have apparently not yet responded to the bank.
Negotiations directly between a bank CEO and the Attorney General are unusual. Generally, teams of lawyers for both parties work out settlement terms. Moynihan’s request to Holder is being seen as an echo of JPMorgan Chase CEO Jamie Dimon’s meeting with Holder last fall. That $13 billion settlement is the largest on record so far between the DoJ and a single bank.
The Justice Department has apparently been targeting a $17 billion settlement with Bank of America and did not view BoA’s $12 billion offer “as a serious one,” according to Reuters.
Bank of America would prefer its $12 billion settlement to include $5 billion or more in “consumer relief,” meaning loan adjustments and so on. For the bank, that means shifting some numbers in some columns and bringing in less money later, as opposed to having to fork over a gargantuan amount of cash. And as the Wall Street Journal pointed out last week, $12 billion is more than the bank’s entire 2013 profit — that’s money they’ll miss.
The Justice Department doesn’t appear to mind showing BoA the cold shoulder, though. According to Reuters, sources said “the Justice Department’s silence about a meeting between Moynihan and Holder suggested Bank of America’s request was premature.”
While there’s a certain amount of fun to be had watching bank executives squirm while their calls go unanswered, getting money out of them will be better still.
Exclusive: BofA asks Holder to meet with its CEO – sources [Reuters]
by Kate Cox via Consumerist
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