Now Homeowners Sue to Stop Bank of America Settlement

Posted on September 1, 2011


Patty Hearst took a dive, and so can Bank of America

Today in federal court, a group of homeowners have sued to stop a settlement agreement between Bank of America and its investors.

Bank of America’s stock is taking a hit these days because no one knows how much they are going to have to pay out in damages due to sloppy foreclosure practices. The purpose of these settlement agreements is to set a limit on how much Bank of America will lose. Once that number is determined, stock traders will know that Bank of America will recover and the stock value will go back up again.

This tidbit of information begs the question: Is “too big to fail” still applicable in our economy? If Bank of America can’t make a deal to limit their damages related to illegal foreclosure practices, then Bank of America could easily fail. Or become smaller by selling off pieces of itself to raise money. Making it small enough to fail.

Wait and see.