Quantcast

Bank of America takes $4 billion litigation hit - WCAX.COM Local Vermont News, Weather and Sports-

Bank of America takes $4 billion litigation hit

Posted: Updated:
(AP Photo/Matt Rourke, File). FILE - This Tuesday, Jan. 14, 2014 file photo shows a Bank of America sign in Philadelphia. (AP Photo/Matt Rourke, File). FILE - This Tuesday, Jan. 14, 2014 file photo shows a Bank of America sign in Philadelphia.
  • NationalMore>>

  • Vegas victim: Crime spree was 'total terror'

    Vegas victim: Crime spree was 'total terror'

    Wednesday, July 30 2014 7:37 PM EDT2014-07-30 23:37:21 GMT
    Police say a suspect arrested in a deadly Las Vegas home invasion told them she fought off a woman with a screwdriver to help her partner in crime as he struggled with and fatally shot the woman's husband.
    A woman who was stabbed with a screwdriver while she unsuccessfully fought to save her husband from a pair of home invaders described Tuesday's deadly crime spree as "total terror."
  • Pipe break that flooded UCLA dumps 20M gallons

    Pipe break that flooded UCLA dumps 20M gallons

    Wednesday, July 30 2014 7:19 PM EDT2014-07-30 23:19:35 GMT
    The quiet summer campus of UCLA found itself suddenly steeped in water and chaos after a major water pipe burst and spewed some eight million gallons, stranding people in parking garages and flooding the...
    Authorities say a pipe break that flooded UCLA's famed Pauley Pavilion has now released 20 million gallons of water and continues to gush.
  • Sheriff: Baby left in van outside doctor's office

    Sheriff: Baby left in van outside doctor's office

    Wednesday, July 30 2014 7:17 PM EDT2014-07-30 23:17:41 GMT
    A doctor and nurses went to the aid of a 2-month-old baby girl after a Florida mom left the infant in a hot minivan outside a pediatrician's office for about an hour, authorities say.
    A doctor and nurses went to the aid of a 2-month-old baby girl after a Florida mom left the infant in a hot minivan outside a pediatrician's office for about an hour, authorities say.
By STEVE ROTHWELL
By AP Business Writer

NEW YORK (AP) - Bank of America said Wednesday that its second-quarter earnings were hit by higher litigation expenses.

The Charlotte, N.C.-based bank earned $2 billion in the second quarter after payments to preferred shareholders, compared with $3.6 billion in the same period a year earlier, a decline of 43 percent.

Revenue fell 4 percent to $21.9 billion from $22.9 billion.

Per share, the bank's earnings worked out to 19 cents, compared with 32 cents a year ago.

The bank's litigation costs of $4 billion crimped earnings by 22 cents a share.

Bank of America also said that it had reached a $650 million settlement Tuesday with American International Group Inc. to resolve all outstanding residential mortgage-backed securities litigation between the two companies.

The bank said that "substantially all" of the litigation expenses incurred in the second quarter of the year were related to existing mortgage issues that have been previously disclosed.

Like its competitors, Bank of America is still dealing with the fallout from the financial crisis that began in 2007 and the subsequent collapse of the housing market. For example, the bank said in March that it will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.

However, unlike JPMorgan and Citigroup, Bank of America has yet to settle a federal investigation into its handling of risky subprime mortgages. Citigroup said on Monday that it had agreed to a $7 billion settlement with the Department of Justice, while JPMorgan reached a $13 billion settlement in November.

"We feel like we've gotten a large chunk of this behind us ... Clearly, the DOJ is the most significant matter that's out there remaining," Chief Financial Officer Bruce Thompson said on a call with reporters.

Bank of America's lawyers met with Justice Department officials Tuesday, but the two parties were unable to reach an agreement, according to a person familiar with the meeting. The Wall Street Journal reported that Bank of America had offered to pay $13 billion in both cash and consumer relief in the meeting, while the department asked for "billions more." Jerome Dubrowski, a spokesman for Bank of America, said he couldn't comment on the discussions.

In April, Bank of America was forced to shelve plans to increase its dividend and stock buyback program. The bank said the move came after it realized that it had incorrectly valued securities that it had obtained through its acquisition of Merrill Lynch in 2009. As a consequence, the lender said it needed to hold a higher level of capital.

Bank of America had intended to buy $4 billion of its own stock and raise its dividend from a penny per share to 5 cents per share. The plan had been approved by the Federal Reserve. The bank said May 27 that it had resubmitted its capital plan to the Federal Reserve.

Thompson told reporters on Wednesday that he couldn't comment on "supervisory matters."

Bank of America's stock fell 29 cents, or 1.8 percent, to $15.53.

___

Associated Press Writer Eric Tucker contributed to this report from Washington.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WCAX. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.