Bank of America reached settlements in two long-running disputes Wednesday.
In the first, Bank of America will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.
The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind the securities. These soured after the housing bubble burst and lost billions in value.
In the second settlement, Bank of America and former chief executive Kenneth Lewis reached a $25 million agreement to end an investigation into their actions in the 2008 merger with Merrill Lynch, New York's attorney general announced Wednesday.
In the FHFA settlement, Bank of America said that it will make cash payments of roughly $6.3 billion and also purchase securities from Fannie and Freddie worth more than $3 billion.
Fannie and Freddie don't directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available and gives Fannie and Freddie a huge role in the housing market. They own or guarantee about half of all U.S. mortgages.
The two were rescued in a taxpayer bailout in 2008 as they sank under the weight of mortgage losses.
The settlement with New York stems from a civil fraud lawsuit that accused the bank and Lewis of failing to disclose Merrill losses and bonuses before the deal closed. The settlement requires the bank pay $15 million and continue certain corporate governance reforms. Lewis, now 67, is prohibited for three years from serving as an officer or director of a public company. He was ordered to pay $10 million.
Attorney General Eric Schneiderman, who inherited the case from predecessor Andrew Cuomo, said the settlement represented a victory in the continued commitment to apply the law equally to individuals and corporations.
"Since I took office, I've acted on the belief that no one, no matter how rich or powerful, should escape accountability for their actions, especially ones that caused such damage to shareholders," he said.
The bank acknowledged the settlement in a statement Wednesday, noting the $15 million reflects the attorney general's cost of investigation and litigation. Last year, Bank of America settled a related class-action shareholder lawsuit for $2.43 billion.
Attorney Bruce Yannett, representing Lewis, said his client relied on experienced legal counsel about disclosures. Yannett said Lewis is proud of his role helping the banking system survive a challenging period and he's pleased to the case behind him.
"The Merrill Lynch acquisition has since proven to be an unmitigated success for Bank of America and its stockholders," Yannett said.
Shares of Bank of America fell 3 cents to close at $17.18 and rose 15 cents in after-hours trading to reach $17.33.