Tomahawk, WI 03/16/2014 (Basicsmedia) – Shares in the nation’s second-largest bank, Bank of America Corp (NYSE: BAC) have increased steadily since 2013. It became a party to various legal troubles after its acquisition of Countrywide Financial and Merril Lynch. However, most of these cases have been settled now. In December 2009, it repaid the entire $45 billion it had received under TARP. It has also made major cost savings by optimizing its branch network and cutting tens of thousands of jobs in 2011 and 2012.

Long term positive outlook

Considering that Warren Buffett invested $5 billion in Bank of America through Berkshire Hathaway, it is reasonable to think that the Oracle of Omaha thinks the bank is a good bet for the future and will still be around and prospering 10 and 20 years from now.

Renewed legal troubles

Investors may have thought that the shadow of the financial crisis had been lifted forever. Not so fast, it seems. The U.S. Attorney’s Office for the Eastern District of New York in Brooklyn is investigating whether Bank of America violated the rules of the Federal Housing Administration’s Direct Endorsement Program. So far, FHA-related litigations pursued by the U.S. Attorney for the Southern District of New York, Preet Bharara, have led to a number of settlements such as a 2012 settlement where Citigroup Inc (NYSE:C) agreed to pay $158.3 million and Deutsche Bank AG (USA) (NYSE:DB) agreed to pay $20.3 million. Bank of America agreed to payment $1 billion to the federal government to settle claims related to its Countrywide home loan subsidiary. On February 4, 2014, JPMorgan Chase & Co. (NYSE:JPM) agreed to pay $614 million to settle similar charges. U.S. District Judge Jed Rakoff is hearing arguments as of this writing related to a U.S. Justice Department demand that Bank of America pay a further $2.1 billion in penalties.

In other legal trouble, the U.S. Federal Deposit Insurance Corp (FDIC) has sued 16 banks including Bank of America for manipulating and fixing the Libor rate. Clearly, the days of multi-billion dollar settlements with the government is not over yet.

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