Will Bank of America Corp (NYSE:BAC) go for trial, Wells Fargo & Co (NYSE:WFC)
It was a disappointing day for Bank of America Corp (NYSE:BAC) on two accounts first Finra penalizing the bank for misspelling of products and re-opening of $8.5 billion mortgage settlement case. In 2011 Bank of America Corp (NYSE:BAC) had agreed to settle the claims of investors for the bonds which were issued by Countrywide Financial Corp which was bought over by the later in 2008. 22 institutional investors including BlackRock Inc (NYSE:BLK), MetLife Inc (NYSE:MET) and Allianz SE’s Pacific Investment Management Co were part of the settlement.
Trustee and Lawyer Matthew Ingber who is overseeing the matter have asked a court in New York to approve the settlement which has been pending since long. He also said that countrywide had only $4.8 billion in assets for settling claims. It also said that Bank of America Corp (NYSE:BAC) cannot be held responsible for countrywide misrepresenting facts and hiding the quality of mortgage which it had at the time of Bank of America Corp (NYSE:BAC) acquiring the company.
“You may hear a lot from the objectors about what the trustee should have done or could have done or might have done,” Ingber told Justice Barbara Kapnick, who must decide whether to approve the deal. “But, your honor, all those coulda, woulda, shoulda are irrelevant if the pot of gold isn’t going to be there.”
An interesting battle is in store which would definitely worth watching the arguments of both the sides. Also lot would depend on what points do AIG, Federal Home Loan banks say as they feel that the settlement which was done in favor of Bank of America Corp (NYSE:BAC) rather than bond holders.
Bank of America Corp (NYSE:BAC) is trading at a price of $13.59, and with market capitalization of $146.08 billion.
Financial regulator FINRA penalized Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) for misspelling mutual funds which were not as per the requirements of the customer. Total of $5.2 million would be paid by both the banks as penalty.
Floating rate debt schemes were recommended by sales team of Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) during year 2007 and 2008. According to Finra customers lost money after they sold units of this funds during financial crisis in 2008.
Brad Bennett, Finra’s chief of enforcement said “Wells Fargo and Banc of America allowed their brokers to sell floating-rate bank loan funds to investors for whom the positions were unsuitable, resulting in significant losses to many customers,”