The Federal Housing Finance Agency’s legal assault on Wall Street moved closer to a merciful end for the banks on Wednesday, when Bank of America Corp. retreated to the tune of $9.5 billion. The FHFA’s lawyers, led by Quinn Emanuel Urquhart & Sullivan’s Philippe Selendy, have now racked up more than $20 billion in settlements after winning a spate of rulings that left the defendants with few options.
Wedesday’s settlement resolves the FHFA’s claims that BofA and two of its subsidiaries, Merrill Lynch & Co. and Countrywide Financial Corp., misled Fannie Mae and Freddie Mac in connection with the sale of mortgage-backed securities. FHFA brought those claims as part of a batch of 18 separate lawsuits against big banks filed in the summer of 2011. BofA will pay a combined $6.3 billion in cash, and will also pay $3.2 billion to purchase mortgage-backed securities from Fannie and Freddie.
The deal is the FHFA’s largest yet, eclipsing an October 2013 settlement with JPMorgan Chase & Co. valued at $5.1 billion. FHFA has also reached truces with UBS AG, Deutsche Bank AG, and Morgan Stanley, among others. The deals are coming faster and faster, with Credit Suisse AG and Societe Generale AG both throwing in the towel in the past month.
Of the FHFA’s original targets, the only ones remaining are Barclay Bank plc, First Horizon National Corp, HSBC North America Holdings Inc., Nomura Holding America Inc., Goldman Sachs & Co. and the Royal Bank of Scotland PLC.
BofA’s settlement averts a bellwether trial against Merrill slated for June 2014 before U.S. District Judge Denise Cote in Manhattan, who has been assigned all of FHFA’s cases except the one against Countrywide. That case was pending before U.S. District Judge Mariana Pfaelzer in Los Angeles, who is overseeing Countrywide’s post–financial crisis litigation.
Quinn Emanuel’s Selendy said in a statement that the settlement “follows years of unrelenting investigation and litigation by the Federal Housing Finance Agency, which set its own path to ensure some fair measure of responsibility for the banks behind our housing and economic crisis.”
Defense lawyers have put a different spin on the litigation, accusing Cote of unfairly handicapping their defense.
BofA and Merrill tapped Williams & Connolly to fight the FHFA’s claims. Goodwin Procter represented Countrywide.