The Justice Department is poised to announce a $16.65 billion settlement with Bank of America over accusations that it duped investors into buying toxic mortgage securities, say people briefed on the matter — the single largest government settlement by a company in American history.
Yet even as that accord nears completion, prosecutors are preparing a separate civil case against Angelo Mozilo, the man who came to embody the risk-taking for which Bank of America is now paying dearly, a rare move against a senior executive at the center of the financial crisis.
The Bank of America settlement will be a coda to a painful period for the bank and the broader financial industry. More than any other Wall Street giant, Bank of America was the source of the toxic subprime loans that helped ignite the crisis — the result of its acquisitions of Merrill Lynch and Mr. Mozilo’s Countrywide Financial. The size and scope of the expected settlement, which could be announced as soon as Thursday, reflects the extent of the damage.
The deal would resolve more than two dozen investigations from prosecutors across the country, the people briefed on the matter said, including Manhattan, Brooklyn, Los Angeles, New Jersey and North Carolina. To settle those varied investigations, some of which have not been previously reported, the bank is expected to pay a $9.6 billion cash penalty and $7 billion in so-called soft-dollar payments to aid struggling consumers. In turn, the Justice Department will forgo any potential cases against the bank over collateralized debt obligations, one of the people said, complex financial instruments the bank sold in the years before the crisis.