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Bank of America (BoA) is finalizing a settlement with the Department of Justice (DOJ) over claims that the bank palmed off worthless mortgages to investors, according to the Wall Street Journal.
In the lead-up to the financial crisis, BoA and its subsidiaries sold hundreds of billions of dollars of toxic mortgage assets to investors. The bank knew that the actual value of these mortgage- backed securities was just a fraction of what it sold them for.
News outlets are reporting on the unprecedented price tag affixed to the BoA agreement, reportedly somewhere between $16 and $17 billion. In fact, Bank of America will pay a fraction of this fine. As the Washington Post noted in 2012, “Corporations can write off any portion of a settlement that is not paid directly to the government as a penalty or fine for violation of the law. A majority of the settlements that federal regulators announced in the past year include some form of restitution that is eligible for a tax deduction.” According to the Journal’s anonymous source, $9 billion of the amount is tax deductible.