SEC Standoff Stalls Bank of America Mortgage Settlement

SEC Chairman Mary Jo White Testifies To Senate Banking Committee On Wall Street Reform
Chip Somodevilla/Getty ImagesSecurities and Exchange Commission Chair Mary Jo White

By Amrutha Gayathri

A standoff within the Securities and Exchange Commission is stalling the final piece of Bank of America's (BAC) record $16.65 billion settlement with the U.S. government tied to troubled mortgage-backed securities, Bloomberg News reported, citing people with knowledge of the matter.

The settlement, announced in August, has hit a roadblock due to a dispute between the SEC's commissioners over waiving a set of additional sanctions that will come to effect when the settlement is entered in court, the report said.

%VIRTUAL-WSSCourseInline-963%The disagreement is over the waiver that will allow the bank to seek investors for private firms, Bloomberg reported.

Two Democratic SEC commissioners are unwilling to grant Bank of America's request for a waiver, and with two Republicans supporting relief measures, the SEC is in a deadlock as its Chair Mary Jo White, the swing vote, refrains from participating due to a conflict, Bloomberg reported.

Bank of America and the SEC weren't immediately available for comment.

The three main penalties that can be imposed on any lender can affect its ability to manage mutual funds, raise capital for private companies, and remove its privilege to issue its own shares or bonds without SEC approval, Bloomberg reported.

The settlement announced by the U.S. Department of Justice requires for the second-largest U.S. bank by assets to pay $9.65 billion in cash to resolve more than a dozen federal and state investigations, and provide $7 billion in help to struggling homeowners and communities.

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