Bank of America (BAC) has agreed to pay $1 billion to settle allegations it improperly handled a $1 trillion sale of mortgage-backed securities, according to a statement from the company.
The settlement is the first of its kind involving a bank that has a history of being the target of criticism by regulators.
The bank is also the subject of an ongoing federal investigation.
“The Bank of Americans settlement is an important step in our ongoing investigation into our dealings with our customers and our customers’ compliance with bank laws,” Bank of Americas President and CEO David C. King said in a statement.
“We will fully cooperate with the U.S. Department of Justice’s ongoing investigation and will continue to provide all customers and shareholders with the very best service.”
King said that the bank will cooperate with a wide range of government agencies as it investigates the conduct of its clients and with the Department of Housing and Urban Development.
The bank has agreed that it will pay the Justice Department a $50 million civil penalty for violating the Financial Institutions Reform, Recovery and Enforcement Act.
Bank of Amer.
is also seeking a $25 million penalty from the Department’s Civil Rights Division.
The Bank’s statement on the settlement said that it expects to pay a total of $1,000,000 to settle the matter and that it is reviewing the matter closely.
The Justice Department has launched an investigation into whether the bank had improperly used its position as a federally insured depository institution to “discriminate against” minority borrowers.
King told reporters last week that the department will work with the bank to address the issue.
The settlement comes as the bank is embroiled in a series of high-profile and costly misconduct investigations that have drawn public scrutiny from both sides of the aisle.
In March, Bank of American agreed to settle a class-action lawsuit with customers over a loan modification program.
The company agreed to allow customers to appeal the modification, but the bank refused to admit to any wrongdoing.
The lawsuit said the bank failed to consider the impact of the program, and also failed to offer any proof that it was working to help minorities or other minorities in need.
The government has also accused Bank of Americac of failing to adequately address allegations that the lender was violating federal anti-discrimination laws by refusing to make loan modifications to people with a history or history of discrimination.
In April, the department accused Bank Americac that it failed to comply with federal laws when it denied loans to former employees of the bank for more than five years.