The MReport Webcast: Thursday 7/15/2014

Bank of America reported a nearly 43 percent decline in second-quarter profits compared to last year thanks to a significant litigation charge. The megabank's CEO, Brian Moynihan, downplayed the decline, insisting the bank is quote--well positioned for further progress. The bulk of the year-over-year drop stemmed from a $4.0 billion litigation expense related to legacy mortgage problems.
Part of that charge included a $650 million settlement with AIG, which sued Bank of America in 2011 for 10 billion dollars in damages. Still remaining, however, is a major settlement with the Justice Department that insiders say has stalled in recent weeks. Both sides are struggling to find middle ground, and details on a final deal have yet to emerge. Bank of America has reportedly boosted its settlement offer to $13 billion, equal to the amount JPMorgan Chase paid in an unrelated settlement last year.

Bank of America is still expressing optimism about the settlement, seeing it as the light at the end of the tunnel: Chief Financial Officer Bruce Thompson is quoted as saying quote--We feel like we've gotten a large chunk of this behind us ... Clearly, the DOJ is the most significant matter that's out there remaining.

The Federal Reserve reported continued growth in economic activity throughout the United States over the past month, bolstering recent reports that the economy is moving in a more positive direction after a disappointing first quarter. The Reserve's Beige Book report shows that activity expanded in nearly all 12 Fed districts, and noted that most districts are optimistic in their outlook, even while the real estate industry showed mixed signs. In a positive development, credit quality was stable or improved in most areas, with only San Francisco posted a decline in credit quality.