Exclusive: BofA asks Holder to meet with its CEO - sources

NEW YORK/WASHINGTON Fri Jun 20, 2014 1:45am EDT

Bank of America Chief Executive Brian Moynihan looks on during an interview in Hong Kong March 8, 2013.  REUTERS/Bobby Yip

Bank of America Chief Executive Brian Moynihan looks on during an interview in Hong Kong March 8, 2013.

Credit: Reuters/Bobby Yip

NEW YORK/WASHINGTON (Reuters) - Brian Moynihan may be taking a play out of Jamie Dimon’s book.

Representatives of Bank of America Corp have asked U.S. Attorney General Eric Holder to meet with Moynihan, its chief executive officer, in an attempt to resolve differences over a possible multibillion-dollar settlement involving shoddy mortgage securities sold by the second-largest U.S. bank and its units, according to people familiar with the negotiations.

Negotiators for Bank of America and the Justice Department have not met in more than a week and have no plans to do so after a flurry of meetings did not bring them close to a settlement amount, sources said.

Bank of America spokesman Lawrence Grayson and Justice Department spokeswoman Dena Iverson declined to comment.

Dimon, the CEO of JPMorgan Chase & Co, took a much-ballyhooed trip to Washington in September to meet with Holder in an effort to close a deal that would allow the largest U.S. bank by assets to put its mortgage securities problems behind it.

In November, the two sides reached a $13 billion accord that Holder has said he planned to use as a template for other banks.

The meeting between JPMorgan’s top executive and the nation’s top law enforcement official was viewed as unusual at the time. Most such settlements are negotiated between a company's lawyers and other Justice Department officials. Associate Attorney General Tony West, the No. 3 person at the agency, has been leading negotiations with Bank of America and other banks over similar investigations.

The Department of Justice has not yet responded to Bank of America about the possibility of the meeting, sources said.

The bank requested the meeting late last week, the people said.

The settlement is intended to resolve several investigations into the bank's packaging of risky mortgages into securities. One probe involves Merrill Lynch, which Bank of America agreed to acquire at the height of the 2008 financial crisis.

Mortgage securities helped fuel the housing boom in the mid-2000s and plummeted in value at the onset of the downturn, causing hundreds of billions of dollars in losses.

Sources said the Justice Department's silence about a meeting between Moynihan and Holder suggested Bank of America's request was premature.

Bank of America has discussed paying about $12 billion, including more than $5 billion to help struggling homeowners, to resolve a range of federal and state probes, primarily into whether the company and its units defrauded mortgage bond investors in the run-up to the financial crisis, people familiar with the matter said.

The Justice Department suggested a $17 billion settlement in the latest round of negotiations and did not view Bank of America's offer as a serious one, one source said last week.

One sticking point is what the mix of fines and relief will be, sources said. Bank of America wants more consumer relief, they said.

Another issue is whether to include the bank's March settlement with the U.S. Federal Housing Finance Agency in the calculation, one person said.

Bank of America paid the FHFA $6.3 billion to resolve claims similar to those made by the Justice Department. JPMorgan's $13 billion deal included a $4 billion payment to the FHFA.

Another point of controversy for Bank of America is the extent to which it should be punished for Merrill's actions, sources said. JPMorgan had the same concerns about Bear Stearns, which it acquired in 2008.

The Bank of America talks are being driven by a lawsuit that the U.S. Attorney's office in New Jersey is drafting against Merrill, sources said. The Justice Department had also threatened to sue JPMorgan days before Dimon's trip to Washington.

The cases follow President Barack Obama's 2012 pledge to hold banks accountable for their role in the housing crisis after authorities faced criticism for little high-profile action.

In recent months, banks and their lawyers have become increasingly alarmed at the upward trajectory of financial penalties from U.S. authorities in a range of cases.

Executives and their allies have gotten involved in negotiations to try to reduce the penalties. Jean-Laurent Bonnafe, CEO of BNP Paribas SA, and the French bank's lawyers met in early May with New York regulators and requested leniency in settlement talks over alleged sanctions violations, a source said earlier this month. Negotiations are continuing.

(Reporting by Karen Freifeld in New York and Aruna Viswanatha in Washington; Editing by Karey Van Hall and Lisa Von Ahn)

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Comments (6)
timebandit wrote:
DOJ needs to hang tough with these crooks. If there ever was a rotted limb on the Big Banking tree, Bank of America/U.S. Trust is it. Hands down, BofA has long been the most arrogant and harmful giant financial conglomerate, to the average American consumer and to the nation, and not just related to the mortgage conflagration it helped create.

Jun 20, 2014 6:48am EDT  --  Report as abuse
CharlesReed wrote:
BOA with Countrywide has a criminal problem with it handling of all the government insured loans (FHA, VA USDA) it foreclosed upon, and it remains a problem because the blank endorsed Notes (Contract) are separated from the debt and title which no longer exist.

The don’t exist because the debt is not control by a contract that the lending party is in possession of. To add to the fact that the Notes were relinquished to Ginnie Mae in order for Countrywide to participate in the selling of a made up financial product called Mortgage Backed Securities (MBS) that most 99% of the world has no clue what they are and how they work.

Because Ginnie Mae is in possession of a document it can never transfer because they did not purchase the debt and are not listed on the document anywhere, they cannot call the loans due or have another call it due, because they needed to have purchase the debt, but are prevented from creating this debt for the Federal Government and are not a lender of home mortgage loans!

Wells Fargo Bank has the exact same problem with its handling of Washington Mutual Bank’s (WaMu) FHA, VA & USDA loans from the Jul 31, 2006 mortgage servicing deal, which involved 1.3 million loans!

JPMorgan deal with the FDIC provided a cover for the FDIC who did not want to take a loss over WaMu’s collapse, so the plan did disguise the lack of ownership of the loans.

So not only was the FDIC on the hook for the losses, but Ginnie Mae who insured the MBS. The investors the Ginnie MBS is mostly the Federal Reserve Bank who would be entitled to 100% of their initial principal investment, but the activities are criminal, so any payment from the result of the activities would come after an investigation as it involves Federal Government funds!

What you got is 800,000 FHA, VA & USDA loans illegally foreclosed in 2009-2010 that were suppose to at least be underwritten for a HAMP. FHA HAMP or VA HAMP, but were not because as they were in the Ginnie MBS there was no authority to modify or foreclose.

The Federal Government must deal with the fact of these Contracts under the possession of Ginnie who is 100% owned by the Federal Gov. BOA already agreed to a $1 billion settlement with HUD back in Jan 2012 for FHA loans, that was separate from the Robo Foreclosure $25 billion deal by all the banks, but that did not include this illegal foreclosing of Countrywide loans.

Whether its now under this Atty Gen or later under another the issue of the $70 billion FHA loan losses with the VA & USDA totals, we the citizens will get out money back from these illegal schemes, as Sen Warren already wrote and put on notice to the Justice Dept on the loses that she put at $38 billion from 2008 to 2013 when she wrote the letter.

Sen Warren is not a Republican with an agenda against President Obama, so if she complaining now it only will continue until Justice and the OCC releases their findings of these crimes.

The secret is in the Notes $ Titles in which Ginnie Mae must always and forever have the blank Notes relinquished to them and the foreclosing parties along with the local county court land recording offices have the Titles. which will in all cases show the lack of ownership and in all cases of Wells Fargo Handling of WaMu Fed Gov loans a Forgery on file, that gain them control over the foreclosure process!

Jun 20, 2014 9:48am EDT  --  Report as abuse
njglea wrote:
No amount of money can change the damage these BIG banks, mortgage companies, developers and other insatiably greedy players caused to America’s democracy. Fines mean nothing to these behemoths or their wealthy owners. Just a tick on the spreadsheet. Meantime, they destroyed the lives of millions of average Americans and people around the world and are acting like a bunch of frat boys who won a game. They didn’t. We must elect people who will seriously tax back the wealth they stole from us – President Eisenhower’s 90% rate sound about right – and use the proceeds to pay off the national debts they ran up and reduce taxes for average and poor Americans.

Jun 20, 2014 10:21am EDT  --  Report as abuse
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