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Bank of America’s $16 Billion Mortgage Settlement Less Painful Than It Looks
The actual pain to the bank could also be significantly reduced by tax deductions. Tax analysts, for instance, estimate that Bank of America could derive $1.6 billion of tax savings on the $4.63 billion of payments to the states and some federal agencies under the settlement. Shares of Bank of America jumped 4 percent on Thursday, suggesting investors believe that the bank could take the settlement in stride.
“The American public is expecting the Justice Department to hold the banks accountable for its misdeeds in the mortgage meltdown,” said Phineas Baxandall, an analyst with the U.S. Public Interest Research Group, a consumer advocacy organization. “But these tax write-offs shift the burden back onto taxpayers and send the wrong message by treating parts of the settlement as an ordinary business expense.”
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