3 Things That Went Bank of America's Way This Week
Bank of America's big dividend boost wasn't the only good thing to happen to the bank this week.
Investors in Bank of America were understandably preoccupied over the past several days, as the news of the big bank's dividend hike, to $0.05 per share, hogged all their attention. Though the increase wasn't huge, the psychological boost was enormous, since this was the first time B of A was able to raise its dividend since the financial crisis.
But that wasn't the only positive news for Bank of America in the last week of March. Here are a few more tidbits of good news that came along, giving the big bank's investors even more reason to smile.
1. A big payment to resolve mortgage claims
The announcement that B of A would be paying the Federal Housing Finance Agency $9.5 billion to settle all outstanding residential mortgage bond claims is a real biggie, taking a huge liability off of the big bank's plate. Knowing that 88% of these types of claims have now been put to bed is likely making investors breathe easier, as well.
2. Charges against a former CEO are put to bed
Former Bank of America CEO Kenneth Lewis, the man who helped turn the bank into the behemoth that current chief Brian Moynihan has been furiously trying to trim down, has settled charges against him related to the acquisition of Merrill Lynch.
Lewis and B of A have both settled claims by the New York Attorney General's office that investors were deceived about the financial status of Merrill during its sale to B of A in late 2008. Both portions of the settlement, Lewis' $10 million and the bank's $15 million will be paid by Bank of America, finally putting "paid" to an unpleasantly nagging issue left over from the tumultuous early days of the financial crisis.
3. A mortgage-related lawsuit gets thrown out
In a blow to the U.S. Department of Justice, a federal magistrate judge in Bank of America's hometown of Charlotte, North Carolina, ruled in favor of the bank in a mortgage-backed securities case on Thursday. The DOJ was bringing suit against B of A over $850 million in MBSes that it said were misrepresented to investors, using a law called the Financial Institution Reform, Recovery and Enforcement Act of 1989.
The FIRREA, which enables the government to sue entities based upon damage done to federal institutions, was used to good effect last year against B of A in the so-called "Hustle" suit. That case, in which prosecutors claimed that fraud in Countrywide's fast-paced mortgage loan production pipeline led to losses at Fannie Mae and Freddie Mac, was a huge win for the federal government.
The DOJ will appeal the ruling, in which the judge stated that FIRREA has historically been used only in cases involving actual mortgage loans, and not MBSes. Right now, though, it's another win for B of A, during one of its most satisfying weeks in years.
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The article 3 Things That Went Bank of America's Way This Week originally appeared on Fool.com.
Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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