Bank of America has requested for its CEO to meet with the U.S. attorney general over a possible multibillion-dollar settlement involving troubled mortgage securities, a source familiar with the negotiations told the Observer Friday.
The proposal for CEO Brian Moynihan to meet with Attorney General Eric Holder is an attempt to reach a resolution in the matter. The Justice Department is seeking to extract a settlement from the bank over the sale to investors of securities backed by home loans that soured and contributed to the financial crisis.
The settlement would add to the billions of dollars the Charlotte-based bank has paid to resolve legal issues that have plagued it since the financial crisis.
The costs have stemmed largely from Bank of America’s purchase of investment bank Merrill Lynch & Co. in 2009 and its purchase of mortgage lender Countrywide Financial Corp. in 2008.
There is disagreement between Bank of America and the Justice Department over how much the bank would pay in cash versus homeowner relief as part of a settlement, the source said. Meanwhile, the Justice Department has been moving ahead with plans to file a civil lawsuit against the bank, according to the source.
Earlier this month, The Wall Street Journal reported that Bank of America was in talks to pay at least $12 billion to settle the civil probes by the Justice Department and various states into the bank's alleged handling of shoddy mortgages.
The Justice Department accord would be a "global" settlement that would resolve other outstanding mortgage-related civil probes, the source said, including a lawsuit filed last year by the U.S. attorney in Charlotte over "prime" mortgages.
A federal magistrate judge earlier this year recommended dismissal of that suit, but U.S. District Judge Max Cogburn on Thursday granted the Justice Department 30 days to file an amended version.
Also Thursday, Cogburn ruled that a related Securities and Exchange Commission lawsuit against the bank could go forward.
At a conference last month, Moynihan described the possible accord with the Justice Department as the last major legal settlement the bank has to resolve.