Bank of America to pay $20bn in charges
Bank of America Corp said it expected to take more than $20bn (£12bn) in charges after settling with mortgage bond investors, resulting in a second-quarter loss.
The $8.5 billion settlement removed a question mark that had been hovering over the bank since October, and its shares rallied.
The deal, combined with other settlement-related charges, was within the range that Bank of America had disclosed in a filing in May. The settlement still requires court approval.
Bank of America settled with a group of investors, including BlackRock Financial Management who alleged the bonds they bought from Countrywide Financial were packed with mortgages that should never have been sold. Bank of America bought Countrywide, once the largest US mortgage lender, in 2008.
The settlement could pressure other big banks, including JPMorgan Chase & Co and Wells Fargo & Co (WFC.N), to settle similar lawsuits with mortgage bond investors.
Bank of America said it expected to post a loss of 88 cents to 93 cents per share for the quarter.