--Bank received subpoenas from the U.S. Department of
Justice
--Bank will take charge of about $800 million related to U.K.
tax rate
--Bank is in settlement discussions with Fannie Mae
(Adds details about discussions between Bank of America and
Fannie Mae in final three paragraphs.)
By Matthias Rieker
Bank of America Corp. (BAC) disclosed that it received subpoenas
from the U.S. government, part of an inquiry related to how U.S.
and European banks set Libor interest rates.
The bank also disclosed in a quarterly regulatory filing that
the decline in the United Kingdom's corporate-tax rate would result
in a third-quarter charge.
The nation's second-largest bank by assets said in its Form 10-Q
filed with the Securities & Exchange Commission late Thursday
it received "subpoenas and information requests" from the U.S.
Department of Justice, the U.S. Commodity Futures Trading
Commission and the United Kingdom Financial Services Authority tied
to a probe by regulators into how banks set the London Interbank
Offered Rate, a key interest rate for bank lending, "and European
and other interbank offered rates."
Last month, Chief Financial Officer Bruce Thompson told
investors the bank was cooperating with Libor-related inquiries
from "U.S. and the foreign regulators."
"We're also one of a number of defendants in some of the other
Libor-related litigation," he said and declined to elaborate
further.
Barclays PLC (BCS, BARC.LN) was forced to pay roughly $450
million to U.K. and U.S. regulators after its staff attempted to
alter Libor to its benefit. Robert Diamond subsequently resigned as
the company's chief executive. But regulators and government
authorities have begun to look into what role other banks had in
pushing Libor down.
Bank of America also said it received inquiries from regulators
about the sale of identity-theft-protection services to its
credit-card customers, "including customers who may have paid for
but did not receive certain of such services from third-party
vendors."
Capital One Financial Corp. (COF) last month agreed to pay $210
million to settle allegations it allowed its call-center
contractors to pressure customers into buying
consumer-credit-protection products such as
identity-theft-monitoring services.
Also, Bank of America said it would take a charge of about $800
million tied to the July decision by the U.K. government to lower
corporate taxes. That lower tax rate will negatively impact Bank of
America's deferred-tax assets because it would take the bank longer
to write off past losses against current and future earnings.
Another potential U.K. corporate-tax cut by 2014 suggested by
the government there would result in a charge of about $400 million
charge, the filing said.
Bank of America also said in its filing it continues its
discussions with Fannie Mae (FNMA) "to attempt to address our
ongoing differences" about soured mortgages the bank had sold to
Fannie that the government-controlled enterprise now demands the
bank take back.
Fannie has become more aggressive with such claims, executives
at several bank have said recently. Fannie is demanding loans be
taken back that were made to borrowers who made payments long after
the crisis hit, or on homes that were foreclosed on two or three
years ago, said a person familiar with the matter.
Bank of America is in settlement discussions and has made some
progress, the person said.
--David Benoit contributed to this article.
Write to Matthias Rieker at matthias.rieker@dowjones.com
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