Bank in $2.43B settlement
Bank of America says it has agreed to pay $2.43 billion to settle a class-action lawsuit related to its acquisition of Merrill Lynch at the height of the financial crisis. In the lawsuit shareholders alleged that Bank of America and some of its officers made false or misleading statements about both companies' financial health. The lawsuit was filed on behalf of investors who bought or held Bank of America stock when the company announced plans to buy Merrill Lynch in a $20- billion deal as the banking industry and federal regulators struggled to contain fallout from the financial crisis in the fall of 2008. The deal came into question later after Bank of America disclosed that Merrill would post $27.6 billion in losses that year. The company subsequently asked for a $20- billion bailout from the government to help offset those losses, on top of $25 billion it had already received. It has since repaid all $45 billion. In announcing the settlement yesterday, Bank of America denied shareholders' allegations, saying it settled to get rid of the uncertainties, burden and costs related to the lawsuit.
Higher stock prices and rising home values boosted a measure of consumer confidence in September to its second-highest level in nearly five years. The University of Michigan's index of consumer sentiment rose to 78.3 this month from 74.3 in August. That's just below May's reading of 79.3, which was the highest since January 2008. Americans were also more optimistic about future job prospects, the survey found. And the number of consumers who expect the economy to keep growing is double the number of those who expect a decline.
LIBOR reform plan
Britain's financial regulator yesterday laid out a 10-point plan to overhaul the handling of the London Interbank Offered Rate, or LIBOR, a key global interest rate that has been the subject of a scandal involving major banks across multiple countries. The new plan proposes that a new agency take over management of LIBOR. It also calls for tougher controls on banks involved in the rate's calculation.