Table of contents
- Role in the Financial Crisis
- Foreclosure Fraud
- Bank of America Incentivized Foreclosures
- Tax Dodger
Role in the Financial Crisis
According to the NY Times Timeline:
Jan 11, 2009
Bank of America Buys Countrywide Financial
Countrywide Financialthe troubled lender that became a symbol of the excesses that led to the subprime mortgage crisis, agrees to be acquired by Bank of America for slightly more than $4 billion in stock. Countrywide helped fuel the housing boom by offering loans (subprime) to high-risk borrowers.
June 7, 2008
$108 Million Settlement on Countrywide Fee Complaint
Countrywide Home Loans and its mortgage servicing unit, which are now part of Bank of America, agree to pay $108 million to settle federal charges that the company overcharged customers who were struggling to keep their homes.
June 18, 2008
Countrywide Settles Lending Suit in Pennsylvania
Countrywide Home Loans agrees to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, settling a matter in which the lender was accused of abusive practices in almost 300 mortgage loans overseen by the court.
Sept 14, 2008
Bank Buys Merrill Lynch
Merrill Lynch agrees to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis. The hurried merger gives Bank of America a footprint in almost every facet of the banking business and vaults it into the upper tier of the nation’s financial institutions.
Feb 22, 2010
$150 Million Settlement With S.E.C. on Merrill Deal.
In a ruling that frees Bank of America from some legal problems, a federal judge writes that he has reluctantly approved a $150 million settlement. But even as the judge approves the settlement, he delivers harsh words for the Securities and Exchange Commission, saying that the agreement is “half-baked justice at best.” In August 2009, the judge rejected the S.E.C.’s first settlement, which would have required the bank to pay $33 million.
Aug 2, 2010
$600 Million Settlement of Class-Action Suits Against Countrywide
The settlement ends several class-action lawsuits that claimed Countrywide concealed mounting risks as it loosened its standards for loans. The settlement also clears former executives and financial firms that underwrote Countrywide stock and were named in the class-action suits.
Oct 15, 2010
Former Countrywide Chief Settles Fraud Case
Angelo R. Mozilo, the former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, agrees to pay $67.5 million to settle a civil fraud case brought by the Securities and Exchange Commission the previous year. Countrywide paid $20 million of Mr. Mozilo’s $67.5 million payment as part of an indemnification agreement.
Jan. 3, 2011
$2.5 Billion Buyback in Mortgage Debt
The agreements center on home loans that Countrywide Financial sold to Fannie Mae and Freddie Mac at the height of the mortgage bubble. The two government-controlled housing giants, which have had billions of dollars in losses in recent years, have said that the lender misrepresented the quality of the loans
April 15, 2011
$1.6 Billion Insurance Settlement
The bank announces a $1.6 billion agreement with Assured Guaranty, the insurer that guaranteed several mortgage-bond deals backed by Countrywide loans.
May 26, 2011
$20 Million Settlement on Military Foreclosures
The Justice Department accuses mortgage servicing companies of wrongfully foreclosing on the homes of military service members. Without admitting wrongdoing, the former Countrywide unit agrees to pay $20 million to approximately 160 victims of illegal foreclosures from January 2006 to May 2009.
June 28, 2011
$8.5 Billion Deal in Investor Suit on Mortgage Debt
The settlement is with a group of more than 20 investors, including the asset managers Pimco, Metropolitan Life and BlackRock, as well as the Federal Reserve Bank of New York. It wipes out all of the bank’s earnings in the first half of the year.
Dec. 21, 2011
$335 Million Settlement in Justice Department’s Bias Suit
The Justice Department announces the largest residential fair-lending settlement in history, saying that Bank of America has agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom.
Feb. 8, 2012
$11.8 Billion Settlement on Foreclosure Abuses
Government authorities and five of the nation’s biggest banks agree to a $26 billion settlement on foreclosure abuses. The amounts from individual banks in the accord are linked to their share of the servicing market. The biggest, Bank of America, will provide $11.8 billion. The bank also agrees to a $1 billion settlement with the federal government over Countrywide loans awarded to “unqualified” borrowers and insured by the Federal Housing Administration.
Sept. 28, 2012
$2.43 Billion Shareholder Settlement Over Merrill
Shareholders, led by pension funds, including ones in Ohio and the Netherlands, had accused Bank of America of misleading investors about the acquisition of Merrill Lynch. The bank denied the allegations, but says that it has agreed to settle in order to put the case behind it.
Oct. 23, 2013
Jury Finds Bank Liable of Having Sold Defective Mortgages
The jury’s decision is seen as a victory for the government in its effort to hold banks accountable for their role in the housing crisis. The jury also finds a top manager at Bank of America’s Countrywide Financial unit liable, pinning some — if not all — of the responsibility for the bad acts on an individual.
March 26, 2014
$6.3 Billion Settlement of F.H.F.A.’s Mortgage Lawsuit
The bank agrees to settle a lawsuit arising from troubled mortgage-backed securities it cobbled together and sold to Fannie Mae and Freddie Mac. As part of the settlement with the Federal Housing Finance Authority, the bank will also repurchase mortgage securities valued at about $3.2 billion. The conclusion occurs on the day the bank and its former chief executive, Kenneth D. Lewis, reach a deal to resolve another suit arising from the financial crisis.
July 30, 2014
$1.3 Billion Penalty in Federal Mortgage Case
The ruling comes nine months after federal prosecutors persuaded a jury to find Bank of America liable for selling questionable loans to Fannie Mae and Freddie Mac before the financial crisis.
Aug. 21, 2014
$16.65 Billion Mortgage Settlement
Bank of America and the Justice Department cap the most sweeping federal investigation into the sale of troubled mortgages by a Wall Street bank since the 2008 financial crisis. The settlement requires Bank of America to pay a $9.65 billion cash penalty and provide about $7 billion in relief to homeowners and blighted neighborhoods.
“Robo-signing” is a term used to describe the robotic process of the mass production of false and forged legal documents for things like mortgage foreclosures. In the 2008 crisis basically bank employees from the leading banks (Bank of America, JP Morgan, Wells Fargo, and Citigroup) were approving thousands of foreclosure without verifying basic information. For example bank employees would sign a document affirming that the bank had reviewed the loan and it didn’t qualify for a modification, especially federal modification programs, when no review had taken place.
Bank of America Incentivized Foreclosures
According to a 2013 CNBC article:
“Bank of America agreed to abide by HAMP (Home Affordable Modification Program (HAMP)) program guidelines, which require it to modify loans for qualified buyers, when it accepted $25 billion in bailout funds from the government in 2008 following the housing collapse. In return for the financial lifeline, the bank agreed to help millions of struggling homeowners by rewriting mortgages with more affordable terms. As an added incentive, the government agreed to pay a cash bonus for every loan that was modified successfully
But, according to the former employees, while the bank was lying to borrowers, it was also falsifying its performance when reporting to the government the number of loans that had been modified. “Often this involved double counting loans that were in different stages of the modification process,” according to Steven Cupples, who supervised a team of Bank of America underwriters until June 2012.
After stonewalling qualified borrowers seeking an affordable HAMP loan, Bank of America representatives could upsell them to a more costly “in-house” loan modification
“Approximately twice a month, Bank of America would order that case managers and underwriters ‘clean out’ the backlog of HAMP applications by denying any file in which the financial documents were more than 60 days old,” he said. “These included files in which the homeowner had provided all required financial documents.”
Beyond the policy of denying affordable loan applications, Bank of America also encouraged its employees to move loans to foreclosure—even when the process could have been prevented, according to said Erika Brown, a former bank customer service representative.
“These homeowners were eligible for loan modifications under HAMP, sent back all the required documents and made all their required payments under a trial plan,” she said. “Bank of America nevertheless damaged their credit ratings by reporting them delinquent, tacked on additional charges to their loans, increased the amounts it considered as being owed and often referred these homeowners to foreclosure.”
“A collector who placed 10 or more accounts into foreclosure in a given month received a $500 bonus,” she said. “Bank of America also gave employees gift cards to retail stores like Target or Bed Bath & Beyond as rewards for placing accounts into foreclosure. Bank of America collectors and other employees who did not meet their quotas by not placing a sufficient number of accounts into foreclosure each month were subject to termination. Several of my colleagues were terminated on that basis.”
Paid no income taxes in 2009 or 2010. Many U.S. corporations, like Bank of America, shift their earnings around, reporting losses in the United States while reporting profits in tax havens like the Cayman Islands, where they pay little or no taxes
Bank of America runs its business through more than 300 offshore tax-haven subsidiaries. It reported $17.2 billion in accumulated offshore profits in 2012. It would owe $4.3 billion in US taxes if these funds were brought back to the US.