BoA offers over US$16 billion in federal deal

[NEW YORK] After months of lowball offers and heels dug in, it took only 24 hours for Bank of America (BoA) to suddenly cave in to the government, agreeing to the largest single federal settlement in the history of corporate America.

The tentative deal - which people briefed on the matter said would cost the bank more than US$16 billion to settle investigations into its sale of toxic mortgage securities in the run- up to the financial crisis - started to take shape last week after the Justice Department rejected yet another settlement offer from the bank.

Bank of America's decision to back down, despite its earlier bare-knuckle brawls with the government, showed the limitations of legal arguments it has clung to for years. The bank, seeking to placate shareholders who feared that the bank would pay through the nose, has long argued that it should not be penalised for the misdeeds of Countrywide Financial and Merrill Lynch, the companies it bought in the financial crisis.