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  • DOJ planning to sue Moody's over crisis-era mortgage bond ratings

    In the fallout from the financial crisis, many argued that the credit ratings agencies’ competition for business led to ratings shopping among bond issuers and relaxed ratings standards for the ratings agencies themselves. Last year, Standard & Poor's reached a $1.375 billion settlement over just such claims. And now the Department of Justice is taking aim at Moody's Investors Service. Click the headline to read more.

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Bank of America nears record RMBS settlement

Largest deal with Justice rumored to be near

Bank of America

According to The Wall Street Journal the much rumored and anticipated Bank of America settlement is near completion. If so, it is by far the largest deal of its kind yet seen.

According to the article:

"Bank of America Corp. and the Justice Department are close to a deal in which the bank will pay between $16 billion and $17 billion to resolve allegations of mortgage-related misconduct in the run-up to the financial crisis, according to people familiar with the matter."

In November, JPMorgan Chase (JPM) agreed to pay $13 billion to settle claims of mortgage-backed securities fraud brought against the bank by the U.S. government.

The U.S. Department of Justice then used some of that money to speed up its cases against other big banks, like Bank of America (BAC) and Citigroup (C).

Last month, Citi officially announced a $7 billion dollar settlement with the U.S. Department of Justice, several state attorneys general, and the Federal Deposit Insurance Corporation to settle residential mortgage-backed securities and collateralized debt obligations after industry whispers that the bank was nearing a resolution.

BofA took a little longer, as the New York Times said the bank was at an impasse in negotiating a multi-billion dollar settlement deal related to the bank’s involvement in the mortgage crisis.

Source: WSJ

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