Bank of America Corp. has reached a settlement with former Countrywide Financial Corp. institutional investors who elected not to join a $624 million class-action case that won court approval in February. The terms of the settlement were not disclosed. The case was pending in the U.S. District Court for the Central District of California. Countrywide’s former auditor KPMG was not part of the settlement.
Blackrock Inc., the California Employees’ Retirement System (CalPERS) and other investors in July filed a lawsuit that alleged Countrywide and its top leaders perpetrated fraud ”in a quest to triple Countrywide’s market share and enrich themselves at the expense” of investors. As previously reported, Bank of America acquired the former subprime lender on July 1, 2008.
Since buying Countrywide, Bank of America, the second-largest U.S. bank, has been besieged with lawsuits related to questionable loans and mortgage-backed securities issued by Countrywide during the housing boom. The $624 million settlement, referred to above, was one of the largest class-action settlements to emerge from the financial crisis.
Interestingly, federal regulators told Bank of America’s board in recent months that they want to see more progress in complying with a 2009 memorandum of understanding requiring the bank to fix governance, risk and liquidity management issues. The bank could face a public enforcement action if it doesn’t satisfy regulators.
Source: Insurance Journal
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