Bank of America to pay nearly $17 billion in settlement with Justice Department

BY Pete Yost, Associated Press and Marcy Gordon, Associated Press  August 21, 2014 at 9:27 AM EST
The Fed policies of Ben Bernanke and Janet Yellen, who begins her term Feb. 1, are making former Harvard economist Terry Burnham withdraw his money from Bank of America. Photo by Davis Turner/Getty Images.

The Department of Justice announced a $16.65 billion settlement with Bank of America Thursday, due to the bank’s involvement with sales of mortgage-backed securities buildling up to the financial crisis. Photo by Davis Turner/Getty Images.

WASHINGTON — The Justice Department has announced a $16.65 billion settlement with Bank of America over its role in the sale of mortgage-backed securities in the run-up to the financial crisis.

The deal announced Thursday calls for the bank, the second-largest in the U.S., to pay a $5 billion cash penalty and provide billions of dollars of relief to struggling homeowners. Bank of America says its cash payouts will total $9.65 billion.

The settlement is by far the largest deal the Justice Department has reached with a bank over the 2008 mortgage meltdown. In the last year, JPMorgan Chase & Co. agreed to a $13 billion settlement while Citigroup reached a separate $7 billion deal.