Bank of America Corp. is nearing a settlement with the U.S. Justice Department in which it will pay between $16 billion and $17 billion to resolve probes into its sale of mortgage-backed bonds in the run-up to the financial crisis, a person familiar with the matter said.
Under the proposed terms, the bank would pay about $9 billion in cash and the rest in consumer relief to settle federal and state claims, according to the person, who asked not to be named because the negotiations are private.
The outlines of the deal were reached last week after a phone call between Attorney General Eric Holder and Bank of America Chief Executive Officer Brian T. Moynihan, the person said. During the July 30 call, Holder said that the government was ready to file a lawsuit in New Jersey if the bank didn't offer an amount closer to the department's demand of about $17 billion, according to the person.
Details of the proposed accord, such as consumer relief and a statement of facts, are still being negotiated, the person said. The Wall Street Journal reported the settlement proposal earlier today.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, and Brian Fallon, a Justice Department spokesman, declined to comment.
The agreement, if finalized, would cement Bank of America's status as the firm punished hardest for faulty mortgage practices. It would eclipse Citigroup Inc.'s $7 billion settlement in July and JPMorgan Chase & Co.'s $13 billion deal in November. Bank of America's settlement also comes on top of its $9.5 billion deal in March to resolve related Federal Housing Finance Agency claims.