Bank of America Corp. on Friday pinned an upper bound to its risk of loss from litigation over private-label, mortgage-backed securities: $7 billion to $10 billion. That amount, announced along with the company's fourth-quarter results, does not represent what Bank of America expects it would have to pay to resolve such claims, the company's executives said.
Instead, it was produced in response to investor demands that it quantify the maximum exposure and the wide-ranging liability estimates that have recently been circulated by analysts. The company will not be setting aside reserves to cover that potential hit, CEO Brian Moynihan said, because the likelihood of being forced to pay those claims is too small to be considered "probable" and thus accounted for.
"As a reminder, there are significant procedural hurdles that parties would have to overcome before any of these amounts become probable," Moynihan said.
