| NEW YORK/WASHINGTON, July 9
NEW YORK/WASHINGTON, July 9 U.S. Attorney
General Eric Holder has formally refused to meet with Bank of
America Corp Chief Executive Brian Moynihan to hammer
out a multibillion-dollar deal, as talks to resolve probes into
shoddy mortgage securities sold by the bank and its units remain
at a standstill, according to people familiar with the matter.
In a letter sent in the second half of June, Holder told
Moynihan that the parties remained too far apart for a meeting
to be productive, one source said.
No negotiations between the second largest U.S. bank and the
U.S. Department of Justice have taken place since the second
week in June, several people said.
The attorney general said in the letter he had been
following the talks and continued to get updates but was leaving
the negotiations to the Justice Department's No. 3 official,
Tony West, the one source said.
Reuters reported last month that Bank of America
representatives had sought a meeting between Moynihan and Holder
to resolve government investigations into potential misconduct
by the bank and its units in packaging mortgages, primarily
during the run-up to the financial crisis.
Bank of America has discussed paying about $12 billion to
settle the probes, including a portion to help struggling
homeowners, while the Justice Department had suggested a $17
billion settlement, sources said. The talks are being driven by
an investigation into the bank's Merrill Lynch unit but also
include the bank itself and its Countrywide unit, sources said.
Government negotiators declined to credit the bank with $6.3
billion Bank of America agreed to pay the Federal Housing
Finance Agency in March over misrepresentations in
mortgage-backed securities purchased by Fannie Mae and Freddie
Mac between 2005 and 2007. The credit would essentially close
the gap, a second source said.
While talks with Bank of America have not progressed in
about a month, Justice Department lawyers have been occupied
with resolving a similar case against Citigroup, sources
said, which may be settled as early as next week.
An announcement on Citigroup could pave the way for renewed
negotiations with Bank of America, sources said.
The Justice Department had threatened both banks with
Citigroup is now likely to pay around $7 billion in a
settlement, Reuters reported on Tuesday.
Bank of America spokesman Lawrence Grayson and Justice
Department spokeswoman Emily Pierce declined to comment.
Moynihan's request was similar to one from JPMorgan
CEO Jamie Dimon, who met with Holder in September as his bank
negotiated a $13 billion accord to put its mortgage securities
liabilities behind it.
After the JPMorgan deal was announced in November, Holder
said he planned to use it as a template for other banks. The $13
billion included $4 billion JPMorgan paid to the FHFA over the
bank's sale of mortgage securities.
The Justice Department has prioritized its pursuit of
financial misconduct. Holder has expressed a desire to wrap up
several major investigations this year.
(Reporting by Karen Freifeld in New York and Aruna Viswanatha
in Washington; Editing by Karey Van Hall and Jonathan Oatis)