Bank of America Corp is close to a deal to pay $8.5 billion to settle claims from a group of powerful investors that lost money on mortgage-backed securities, a source familiar with the process said Tuesday.
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The settlement, first reported by the Wall Street Journal, would be the largest such sum in the banking industry to date. The deal would have to be approved by the bank's board, which met Tuesday to discuss it, according to the source.
The largest U.S. bank by assets has been fighting claims by a group of 22 investors over the housing-related securities it packaged and sold before the financial crisis. The investor group includes BlackRock Inc, MetLife Inc and the Federal Reserve Bank of New York.
The source said the settlement extends beyond the case brought by the initial group of investors and could resolve ''significant parts'' of the bank's exposure to repurchase claims from private investors.
Bank of America was not immediately available for comment Tuesday.
BlackRock declined to comment.
Bank of America's shares rose about 3.5 percent in after-hours trade on Tuesday after news of the settlement deal was first reported.