Brian Moynihan may be taking a play out of Jamie Dimon’s book.
Representatives of Moynihan’s Bank of America have asked US Attorney General Eric Holder to meet with the CEO in an attempt to resolve differences over a possible multibillion-dollar settlement involving shoddy mortgage securities sold by the country’s No. 2 bank and its units, according to people familiar with the negotiations.
Negotiators for BofA and the Justice Department have not met in more than a week and have no plans to do so after a flurry of meetings did not bring them close to a settlement amount, sources said.
BofA spokesman Lawrence Grayson and Justice spokeswoman Dena Iverson declined to comment.
Dimon, the CEO of JPMorgan Chase, took a much-ballyhooed trip to Washington in September to meet with Holder in an effort to close a deal that would allow JPM, the No. 1 bank in the US, to put its toxic mortgage problems behind it.
Two months after the face-to-face, the two sides reached a $13 billion accord that Holder has said he planned to use as a template for other banks.
The Dimon-Holder meeting was viewed as unusual at the time. Most such settlements are negotiated between lawyers and middle-level officials. Associate Attorney General Tony West, the No. 3 person at the agency, has been leading negotiations with BofA and other banks over similar investigations.
Justice has not yet responded to BofA request late last week for a boss-to-boss meeting, sources said.
The settlement is intended to resolve several investigations into the bank’s packaging of risky mortgages into securities. One probe involves Merrill Lynch, which BofA agreed to acquire at the height of the 2008 financial crisis.
Mortgage securities helped fuel the housing boom in the mid-2000s and plummeted in value at the onset of the downturn, causing hundreds of billions of dollars in losses.
Sources said Justice’s silence about a meeting between Moynihan and Holder suggested BofA’s request was premature.
The Charlotte, NC, bank has discussed paying about $12 billion, including more than $5 billion to help struggling homeowners, to resolve a range of federal and state probes, primarily into whether the company and its units defrauded mortgage bond investors in the run-up to the financial crisis, people familiar with the matter said.
Justice suggested a $17 billion settlement in the latest round of negotiations and did not view BofA’s offer as serious, one source said last week.
One sticking point is what the mix of fines and relief will be, sources said. BofA wants more consumer relief, they said.
Another issue is whether to include the bank’s March settlement with the Federal Housing Finance Agency in the calculation, one person said.
BofA paid the FHFA $6.3 billion to resolve claims similar to those made by Justice. JPM’s $13 billion deal included a $4 billion payment to the FHFA.
Another point of controversy for BofA is the extent to which it should be punished for Merrill’s actions, sources said. JPM had the same concerns about Bear Stearns, which it acquired in 2008.
The BofA talks are being driven by a lawsuit that the US Attorney’s office in New Jersey is drafting against Merrill, sources said. Justice had also threatened to sue JPM days before Dimon’s trip to DC.