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BUSINESS
New York

Filing: Bank of America may face civil charges

Paul Davidson
USA TODAY
  • Justice Department%2C SEC%2C N.Y. attorney general all give notice of possible civil actions
  • Regulators focusing on mortgage-backed securities
  • Bank%27s Merrill Lynch unit also faces scrutiny

Bank of America may face civil charges over one of the central elements of the financial crisis: mortgage-backed securities and similar assets.

In a regulatory filing Thursday, BofA said the Justice Department has warned it that it intends to file civil charges related to one or two jumbo prime securitizations.

BofA also said the Securities and Exchange Commission is considering filing civil charges against Merrill Lynch, which it owns, tied to a collateralized debt obligation investigation.

Additionally, the filing said that the New York Attorney General's office intends to file action against Merrill Lynch, following an investigation of some of its residential mortgage-backed securities.

Jumbo mortgages are larger than conventional ones, and prime mortgages are generally given to borrowers with solid income qualifications and stellar credit histories. Collateralized debt obligations, better known as CDOs, are mortgages that banks used to regularly bundle together and then sell off in pieces to investors. Many CDOs went sour when the housing market collapsed. The assets being scrutinized now date back to before the 2008 financial crisis.

Asked for comment, BofA spokesman Larry Di Rita said: "We've made progress putting many of the issues behind us and we'll continue to work to put the remainder of them behind us."

And BofA said that it is fully cooperating with the investigations. "The Corporation has been in active discussions with senior staff of each government entity in connection with the respective investigations and to explain why the threatened civil charges are not appropriate," the filing said.

News about the agencies' contact with the Charlotte-based bank was on page 218 of the company's quarterly earnings report.

BofA stock gained 2.4% to $14.95 in regular trading Thursday. After hours, the stock fell less than 1%.

Contributing: USA TODAY's Gary Strauss

Bank of America's headquarters in Charlotte.
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