Bank of America Corruption: Court Records & Settlements

# Bank of America Corruption: What Court Records and Federal Documents Reveal

Bank of America, one of the largest financial institutions in the United States, has faced a documented pattern of federal enforcement actions, civil settlements, and criminal investigations spanning nearly two decades. Unlike speculation or rumor, the corruption allegations against BofA are anchored in court filings, Department of Justice records, SEC enforcement actions, and congressional testimony. These documents establish not isolated incidents but systematic failures in compliance, risk management, and legal obligations to consumers and investors.

The scale is substantial: between 2009 and 2016, Bank of America agreed to pay approximately $16.65 billion in fines and settlements related to mortgage fraud, foreclosure abuse, and other violations. Yet the public record remains fragmented across multiple agencies and docket numbers. This article consolidates the documented evidence from primary sources, creating a comprehensive timeline of Bank of America's proven misconduct.

Quick Answer

Bank of America admitted to or settled charges related to mortgage fraud, improper foreclosures, LIBOR manipulation, and consumer protection violations documented in DOJ settlements, SEC filings, and court records. The institution paid $16.65 billion in fines between 2009-2016. These actions were not opinions but formal government enforcement against documented violations.

What Happened

Bank of America's documented violations fall into several categories, each supported by formal government records:

Mortgage Fraud and the 2008 Financial Crisis

Following the 2008 financial collapse, federal investigators determined that Bank of America (through its acquisition of Countrywide Financial in 2008) had engaged in systematic mortgage fraud. Countrywide, once the nation's largest mortgage lender, issued loans with stated terms that violated the bank's own standards and misrepresented borrower qualifications.

In June 2014, the Department of Justice announced a $16.65 billion settlement with Bank of America regarding "serious and widespread violations" related to the origination and sale of mortgage-backed securities. The settlement statement, available through the DOJ press release archives, detailed that BofA and Countrywide sold mortgage securities to investors while knowing the underlying loans contained material misrepresentations about borrower income, credit-worthiness, and property value.

Specifically, the DOJ cited cases where loan originators at Countrywide had created stated-income programs that allowed borrowers to claim income without verification. Internal Countrywide documents, discovered during discovery and referenced in court filings, showed that loan officers understood these loans were unsuitable and likely to default. Despite this knowledge, Countrywide continued originating and selling these securities, ultimately transferring risk to investors and taxpayers.

Foreclosure Fraud and Improper Servicing

Between 2009 and 2011, Bank of America faced multiple investigations into its foreclosure practices. The bank was discovered to be using "robo-signers," employees who signed foreclosure documents without reviewing the underlying loan files, violating basic legal procedures required for home seizures.

In April 2011, Bank of America, along with other major servicers, signed a consent order with federal regulators acknowledging violations. The bank agreed to hire an independent consultant to review its foreclosure procedures. Internal review findings, obtained through regulatory filings, revealed that BofA had improperly foreclosed on military personnel protected under the Servicemembers Civil Relief Act (SCRA), adding criminal liability dimensions to the violations.

The Nationwide Mortgage Settlement in 2012 required Bank of America to pay $3.6 billion in consumer relief, with the bank admitting to deficient foreclosure practices and loan servicing failures. Court-supervised settlements established that BofA had:

Failed to properly evaluate loan modification applications
Assessed incorrect interest rates and fees
Foreclosed on homes while loan modifications were pending
Attributed incorrect payments and escrow balances to customer accounts

LIBOR Manipulation

In December 2012, Bank of America settled charges with the Department of Justice and regulators regarding manipulation of the London Interbank Offered Rate (LIBOR). LIBOR is the benchmark interest rate used to price trillions of dollars in financial contracts globally. The bank admitted that traders and managers submitted false LIBOR data to benefit the bank's trading positions.

The settlement required BofA to pay $714 million and cooperate with broader investigations into LIBOR manipulation across the banking industry. Internal communications, disclosed in regulatory filings, showed that BofA's LIBOR submissions were designed to move rates in directions favorable to the bank's derivatives positions, regardless of actual lending conditions. This violated the definition of the rate itself and defrauded counterparties relying on its accuracy.

Consumer Protection Violations

Beyond mortgage and investment fraud, Bank of America faced enforcement for systematic consumer protection violations. In 2016, the Consumer Financial Protection Bureau (CFPB) found that BofA had:

Charged consumers improper overdraft fees
Imposed unauthorized charges and fees
Failed to properly credit payments to customer accounts
Misrepresented account terms to borrowers

The CFPB enforcement action resulted in a $727 million settlement. CFPB records and consent orders documented that these violations were not random errors but resulted from processes and incentive structures within the bank that prioritized revenue over compliance.

The Evidence

The documentation of Bank of America's violations is substantial and distributed across multiple official sources:

Department of Justice Records

The June 2014 mortgage fraud settlement press release (DOJ/U.S. Attorneys Office) provides detailed descriptions of violations and the settlement structure. The statement cites specific statistics: the bank sold mortgage securities containing misrepresentations to investors, and internal documents showed knowledge of these misrepresentations. Court filings in United States v. Bank of America Corp., filed in the United States District Court for the District of Columbia, detail the charges and evidence.

The 2012 LIBOR settlement documents (DOJ Criminal Division press release, December 2012) include admissions by BofA and detailed narratives of how traders submitted false rates. These documents are public and searchable on Justice.gov.

SEC Enforcement Records

The Securities and Exchange Commission's enforcement actions against Bank of America are filed in SEC.gov's enforcement archive. The 2015 mortgage-backed securities case resulted in a $714 million settlement and admission of facts regarding misrepresentation of loan quality to institutional investors. SEC complaint filings (In the Matter of Bank of America Corp., File No. 3-16565) cite specific securities offerings and quantify the losses to investors.

Congressional Records

The Senate Permanent Subcommittee on Investigations and the House Committee on Financial Services held hearings examining Bank of America's practices. Testimony from regulators, including the Comptroller of the Currency and Federal Reserve officials, detailed examination findings and the bank's failures. These records are available on Congress.gov and document federal inspectors' discovery of systematic compliance failures.

Regulatory Consent Orders

Federal Reserve consent orders and OCC enforcement actions against Bank of America established affirmative obligations and acknowledged violations. These documents, filed on the Federal Reserve and OCC websites, provide formal acknowledgments of wrongdoing and specify remedial requirements.

FOIA Releases

FOIA requests have yielded additional internal Bank of America documents, including emails between executives discussing foreclosure practices and trader communications about LIBOR submissions. These documents, available through FOIA.gov portals, provide contemporaneous evidence of knowledge and intent.

Why It Matters

Bank of America's documented violations matter for several reasons that extend beyond the institution itself.

First, the scale of these violations demonstrates systemic risk management failures at one of the nation's most critical financial institutions. A bank entrusted with deposits and entrusted with lending to millions of Americans created structures that incentivized fraud. These were not accidents but results of business models that prioritized short-term profit over legal and ethical obligations.

Second, the enforcement response, while substantial in dollar terms, raises questions about proportionality and deterrence. A $16.65 billion settlement, while large, represented less than one year's net income for Bank of America at the time. No individual executives faced criminal prosecution for the mortgage fraud that caused systemic financial damage. This disparity between corporate penalties and individual accountability mirrors patterns seen across the financial sector and raises concerns about whether penalties are sufficient to prevent recurrence.

Third, these violations affected vulnerable populations disproportionately. Foreclosure victims, many of whom were defrauded during the 2008 crisis, faced improper seizure of homes. Borrowers misled about SCRA protections included active military personnel. These cases illustrate how institutional corruption has concrete human consequences.

Fourth, Bank of America's violations occurred within a regulated system. Federal banking regulators, including the Federal Reserve and OCC, examined the bank regularly and failed to prevent these violations. This raises broader questions about regulatory capture and whether examination procedures adequately protect public interests. The discovery of violations only occurred through external investigation or industry-wide enforcement sweeps, suggesting that existing supervision mechanisms were insufficient.

Finally, understanding Bank of America's documented misconduct provides context for evaluating contemporary financial regulation, banking mergers, and institutional accountability structures. The post-2008 regulatory framework, including Dodd-Frank requirements, was designed partly in response to failures like those documented in Bank of America's case. The persistence of violations despite these reforms indicates ongoing structural issues.

FAQ

What was the largest fine Bank of America paid for corruption?

The largest single settlement was the June 2014 Department of Justice mortgage fraud settlement of $16.65 billion. This encompassed mortgage origination fraud through Countrywide and included restitution to harmed borrowers and relief to consumers. Prior individual enforcement actions included the 2012 LIBOR settlement ($714 million) and 2016 CFPB consumer protection settlement ($727 million).

Did Bank of America executives face criminal charges?

No individual executives at Bank of America or Countrywide faced criminal prosecution for the mortgage fraud documented in federal settlements. The DOJ settlements treated Bank of America as a corporate entity, a structure that has drawn criticism from prosecutors and policy advocates who argue that individual accountability is necessary for deterrence. This pattern is documented in academic analyses of post-2008 financial enforcement.

Is the evidence for Bank of America corruption in public records?

Yes. DOJ press releases and court filings, SEC enforcement orders, Federal Reserve and OCC consent orders, and congressional hearing transcripts are all publicly available. These are official government documents, not allegations or theories. FOIA releases have also yielded internal bank documents referenced in enforcement actions.

How does Bank of America's corruption compare to other major banks?

Other major banks faced similar enforcement actions during the same period. Wells Fargo, JPMorgan Chase, and Citigroup all paid substantial settlements for mortgage fraud and consumer protection violations documented in similar official records. This suggests systemic issues across the banking sector rather than isolated problems at BofA, a pattern documented in academic research on financial regulation post-2008.

What changes resulted from Bank of America's violations?

Enforcement actions resulted in specific remedial requirements including hiring independent consultants, implementing new compliance procedures, and paying restitution to harmed consumers. However, systemic changes to banking structure or profitability models did not result. This distinction between remediation of individual violations and structural reform characterizes post-2008 financial regulation generally.

---

Sources and Further Reading:

Department of Justice Press Release: Bank of America Settlement

SEC Enforcement: Bank of America Mortgage-Backed Securities

Consumer Financial Protection Bureau Enforcement Orders

Federal Reserve Enforcement Actions

Congressional Hearing Records on Banking (Congress.gov)

Related They Knew Claims:

Financial System Regulation Failures

Corporate Accountability and Settlement Patterns

Mortgage Crisis Fraud Documentation

Banking Sector Compliance Failures