America’s second largest lender has reached a $16.65 billion settlement with US federal authorities for selling toxic mortgages misleading investors, the Justice Department said Thursday.
“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” Attorney General Eric Holder said in astatement posted on the US Justice Department website on Thursday.
The bank will pay out $9.65 billion in cash and $7 billion for consumer relief – such as modified home loans and refinanced mortgages.
"Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue,” the statement says.
The bank has agreed to pay a $5 billion 'civil penalty' to settle claims under the Financial Institutions Reform and Recovery Enforcement Act (FIRREA), a federal law introduced after the loan crisis in the 1980s.