Bank of America to settle credit union accusations
By CHRISTINA REXRODE | The Associated Press April 2, 2013 3:02PM
NEW YORK — Bank of America will pay $165 million to settle a dispute over mortgage-backed securities it sold to credit unions that later collapsed.
The National Credit Union Administration — the federal agency that regulates credit unions — announced the settlement Tuesday.
Bank of America did not admit any wrongdoing.
The NCUA has filed similar lawsuits against other banks and has won a combined $171 million in settlements from Citigroup, Deutsche Bank and HSBC. It still has lawsuits pending against Barclays, Credit Suisse, Goldman Sachs, JPMorgan, RBS, UBS and others.
The agency said it uses net proceeds from the settlements to offset what federally insured credit unions have to pay to the “stabilization fund” set up to pay for losses caused by the failure of other credit unions.
Before the financial crisis, big banks would make mortgage loans, then bundle them and sell them off to investors ranging from hedge funds to credit unions to mortgage lenders Fannie Mae and Freddie Mac. Many of those securities soured when the housing bubble burst, and many investors now say that they were misled about the quality of what they were buying.
A Bank of America spokesman declined to comment.
In a regulatory filing in February, Bank of America said that the settlement amount would be covered by existing reserves.