Bank Of America Set For Latest Apology In Novelty-Sized Check Form

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Doesn't even have to approve fines of this size anymore. By © World Economic Forum, swiss-image.ch/Photo by Michael Wuertenberg [CC BY-SA 2.0], via Wikimedia Commons

Michael Wuertenberg, via Wikimedia Commons

Bank of America’s crisis-era acquisition of the collapsing Merrill Lynch will never enjoy the sort of “albatross around the neck from here to eternity” status that the Countrywide Financial deal has pretty much cornered. But it wouldn’t be a BofA acquisition without some sort of legal liability attached. And so it has come: a $400 to $450 million fine for some creative accounting at ML and BofAML thereafter designed to reduce the amount the banks had to keep high and dry. Now, that’s a drop in the bucket for a firm that’s paid something like $1 trillion over the last year years, but this latest impending settlement is notable for just how tremendously unsurprising it must be for BriMoy & co. after the SEC laid it out like this:

One variety was internally called “leveraged conversion,” according to people familiar with the trades. In that strategy, a small team on Bank of America’s New York equities desk arranged for a handful of clients to put up token amounts of their own money to receive loans of nearly 100 times those amounts, the people said.

The bank would arrange large trades that suited other financing needs it had, reducing its funding costs and the amount it set aside in lockup reflecting what it owed clients, the people said. The bank did billions of dollars’ worth of such trades from 2009 to 2012, they said.

Some traders dubbed elements of the strategy “fugazi P&L”—slang for phony profit-and-loss math, the Journal reported last year.

Bank of America Nearing SEC Settlement in Client-Accounts Probe [WSJ]

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August was kind of rough for Bank of America on the legal front, to the point that we once said in Write-Offs "Everybody who hadn’t yet sued BofA did today, or will soon." But that turned out to be wrong! Or at least, it underestimated the continuing appeal of suing Bank of America, because now not only is everyone who is not Bank of America suing Bank of America, but so is Bank of America: [I]n Florida's Palm Beach County alone, Bank of America has sued itself for foreclosure 11 times since late March, according to foreclosure fraud activist Lynn Szymoniak, who forwarded one such foreclosure filing, dated March 29, 2012, to The Huffington Post. ... In the March 29 filing, Bank of America is seeking to foreclose on a condominium and names the condo owner and Bank of America as defendants in the suit. The company is literally seeking damages from itself in order to foreclose on the condo owner. Ha ha ha but why is Bank of America a delinquent condo owner? Because of course it's not; it's the second lien holder: