"Together, these actions described above are expected to reduce Bank of America's pretax income by approximately $2.7 billion in the fourth quarter of 2012"
- Bank of America
Bank of America agreed to pay a $11.7 billion package, which was designed to settle claims resulting from mortgage-backed investments. The bank will resolve all existing and future claims about misrepresentation the quality of home loans it sold to Fannie Mae from 2000 through 2008. It will pay $3.6 billion in cash to the government mortgage agency Fannie Mae and buy back $6.75 billion in loans that the bank and its Countrywide Financial. In September, the BoA agreed to pay $2.43 billion to settle a class-action lawsuit related to its takeover of Merrill Lynch.
"This does put the GSE stuff behind it," said Paul Miller, an FBR Capital Markets Corp. analyst who has a hold rating on Bank of America shares. "We thought this would be dragged out many years, or at least another two years."
"Together, these actions described above are expected to reduce Bank of America's pretax income by approximately $2.7 billion in the fourth quarter of 2012," the company said. After laying out the costs associated with the settlement, as well as some other items, Bank of America said it expects "earnings per share to be modestly positive for the fourth quarter of 2012."
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