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US banks agree $18.5bn settlements in effort to clean up mortgage crisis

Guardian – Ten US banks announced two huge settlements worth a total of $18.5bn on Monday, in the latest moves to clear up claims relating to the mortgage crisis that foreshadowed the meltdown of the American economy.

Bank of America agreed to pay $10bn to Fannie Mae, the national mortgage guarantor, to settle claims that Bank of America sold Fannie Mae bad loans for 10 years, ending in 2008. As part of the agreement, Bank of America will also buy back $6.75bn of bad mortgage loans. All the money will go straight to Fannie Mae, which will then be forced to hand it straight to the US government. The US Treasury, exasperated with continued losses at Fannie Mae and Freddie Mac, long ago barred either of the mortgage giants from keeping any profits.

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