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US OFFICIALS said today that Bank of America had reached a record settlement of nearly $17 billion (£10.25bn) to squash an investigation into its role in the sale of mortgage-backed securities.
They said the bank will pay $9.65 billion in cash and provide consumer relief valued at $7 billion.
The deal is by far the largest settlement arising from the 2008 economic meltdown in which millions of US citizens lost their homes to foreclosure.
In effect, the bank is buying itself immunity from prosecution.
The deal requires Bank of America to acknowledge serious misrepresentations about the quality of residential mortgage-backed securities issued by itself and by Countrywide Financial and Merrill Lynch.
Those institutions were acquired by the bank when they were both on the brink of failure in 2008.
Bank of America had argued that it should not be held liable for mortgages issued by Countrywide and Merrill Lynch.
