Bank of America’s Profits Down as Litigation Costs Eat Away 43% of Earnings
Written on August 12, 2014
Massive legal fees for mortgage litigation ate into a significant chunk of Bank of America’s second-quarter earnings.
According to a July 16 Los Angeles Times article, the second-largest bank in the U.S. took a $4 billion hit in its second quarter, which depleted its profits by 43%.
These $4 billion in legal costs, reports the Los Angeles Times, come from mortgage litigation fees stemming from the Charlotte, N.C. bank’s 2008 purchase of Countrywide Financial Corp., a high-risk home lender based in Calabasas. In the years leading up to the recession, Countrywide Financial was one of the major lenders that enabled so many Americans to purchase houses they couldn’t actually afford.
According to the Boston Globe, Bank of America earned $2.3 billion in profits on revenue of $22 billion in the second quarter of 2014.
Throughout the United States, business litigation law is one of the biggest types of legal cases. In many courts across the country, more than 60% of all cases are usually filed by businesses; in addition, some 58% of small businesses reported needing to hire a lawyer for small business for their business litigation law process.
But what is business litigation, exactly?
According to the Florida Bar, the business litigation definition is the “practice of law dealing with the legal problems arising from commercial and business relationships including litigation of controversies arising from those relationships.”
And despite Bank of America’s business litigation attorney fees cutting into a major part of its profits, chief executive Brian Moynihan remains optimistic about the bank’s future, according to the Los Angeles Times.
“The economy continues to strengthen, and our customers and clients are doing more business with us,” Moynihan said in a statement.