Bank of America discloses new probes
02/25/2014 7:12 PM
02/25/2014 7:12 PM
Bank of America disclosed Tuesday that it is the subject of two investigations by authorities inside and outside the U.S.
In a filing with the Securities and Exchange Commission, the Charlotte-based bank said the civil division of the U.S. Attorney’s Office for the Eastern District of New York is investigating its compliance with the Federal Housing Administration’s Direct Endorsement Program.
Under the program, FHA-approved lenders can underwrite FHA-backed mortgages without prior review by the U.S. Department of Housing and Urban Development. Federal fraud lawsuits have been filed against other big lenders in recent years, alleging “reckless” practices under the program.
In the same securities filing, Bank of America said government authorities in North America, Europe and Asia are investigating the bank’s “conduct and practices” in certain foreign exchange markets “over multiple years.”
The disclosure comes as other banks are probed over potential manipulation of foreign-exchange markets. Authorities in multiple countries have examined possible manipulation in the U.S., U.K., Switzerland and Hong Kong.
Bank of America said it is cooperating with both investigations. A spokesman declined to comment beyond the SEC filing.
Also Tuesday, Bank of America said it has boosted its estimate of potential litigation-related losses to $6.1 billion, an increase of $1 billion over its previous estimate. The losses would be beyond what the bank puts into its legal reserves to cover litigation-related costs.
Bank of America has paid more than $50 billion in litigation costs since the financial crisis. Much of the costs resulted from legal issues stemming from Countrywide Financial Corp., which the bank bought in 2008.
The bank said litigation expenses were $6.1 billion last year, up from $4.2 billion in 2012. The figures represent funds spent on settlements.
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