Boston, MA 08/22/2214 (wallstreetpr) – Bank of America Corp (NYSE:BAC) finally took a call to pay $16.7 billion in order to settle the budding charges emanating from the sale of a myriad of mortgages backed by sumptuous securities. Analysts are of the opinion that this move is expected to help BAC put the existing or developing housing bubble behind!
Bank of America Corp (NYSE:BAC) segregated the entire sum payable to the apt parties; the breakups for the same include a cash penalty worth a whopping $9.65 billion, a provision of sustained relief to homeowners at a payout of $7 billion, and the remaining sum vis-à-vis the liabilities associated with the purchases pertaining to Countrywide Financial Corp (the sometime largest mortgage lender in the US) and Merrill Lynch & Co.
A bank analyst reviewed and conjectured that the bulk of this settlement shall veritably wipe away the net earnings of a single quarter! However, on the better premise, this move shall free the CEO, Brian Moynihan – the successor to the embattled CEO, Ken Lewis.
It was Lewis, under whom Bank of America Corp (NYSE:BAC) opted to buy Countryside Financial in FY 2008. Mosby reiterated that all pending and overhung issues pertaining to mortgage have been suitably dealt with, and all and sundry can now how BAC operates for the benefits of its shareholders and not the myriad of litigants.
A Comparison Drawn
Incorporating the settlement amount paid on Thursday, BAC has paid whopping $70 billion since its inception for the resolution of sumptuous legal disputes pertaining to forgery or financial crisis. In contrast, JPMorgan Chase & Co. (NYSE:JPM) paid off $30 billion, which is less than half of what BAC paid!
The settlement lifted Bank of America Corp (NYSE:BAC)’s shares by 4.12%, however, Dave Ellison (a manager of portfolios at Hennessy Funds – an owner of BAC shares) feel that the lifting of settlement might not just be enough to aptly cap a sumptuous, significant rally. He further added that unless the interest rates payable tread up, the stock won’t create the impact and fanfare, it is deemed to get!