Report: BofA, Justice Department Finalizing $16B Settlement

Bank of America and the Justice Department are close to completing a long-rumored and record-setting deal to resolve allegations of misconduct in the sales of mortgage-backed securities that went bad, according to a report from the Wall Street Journal.

Citing "people familiar with the matter," the Journal reported Wednesday afternoon that BofA has agreed to pay between $16 billion and $17 billion to clear itself of charges that it knowingly sold toxic securities in the run-up to the financial crisis. The allegations mostly revolve around BofA's Merrill Lynch unit, which the bank acquired in 2008.

According to the report, BofA will pay approximately $9 billion to the government, with the rest going toward consumer relief.

Noting that the deal could still fall through, the Journal report says no announcement is likely to come this week as representatives on both sides meet to finalize the terms.

If the latest rumored agreement is true, the deal would mark the largest-ever penalty in a civil settlement between the government and an institution, a record previously held by JPMorgan Chase after it agreed to a $13 billion settlement in a similar case last year.

BofA and the Justice Department reportedly came to an agreement last week, only a day after a federal judge ruled the bank must pay nearly $1.3 billion over a fraud case brought on by alleged misconduct at Countrywide, another acquisition made in 2008. At the time that decision was publicized, a spokesperson for BofA said the bank plans to review the ruling and assess its options to appeal.

In addition, the firm reported a legal expense of $4 billion in the second quarter, "substantially all" of which was related to mortgage matters. The case with the Justice Department stands as one of the bank's last major legal hurdles.

A spokesperson for BofA declined to comment on the rumored settlement.