From the New York Times report in October:
On Tuesday, after watching its shares get pummeled again, Bank of America went on the offensive, vowing to “defend the interests of Bank of America shareholders,” and hire more lawyers.
“It’s loan by loan, and we have the resources to deploy in that kind of review,” said Brian T. Moynihan, Bank of America’s chief executive, on a conference call to discuss the bank’s results for the third quarter.
Although the bank turned in better results than expected, much of the call was given over to the put-back issue. “We have thousands of people who are willing to stand and look at these loans,” Mr. Moynihan told analysts. “We’d love never to talk about this again and put it behind us, but the right answer is to fight for it.”
Bank of America made such a strong argument against the idea that it would make billions of dollars of payouts that it even convinced banking skeptics like Yves Smith at the blog Naked Capitalism. She thought that “the multi-billion claim looks to be a stretch.”
Today we learned that Bank of America is completing an agreement to pay $8.5 billion to settle the investor claims.
So was Bank of America over-estimating the strength of its case against buying back the loans? There seems to be a gap between Bank of America’s October bluster and its June settlement. Surely investors who bought or held the stock during the intervening months will want an explanation for this change of strategy.
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