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Report: Disagreement Among SEC Commissioners Stalling Bank of America Settlement

Bank of America SettlementBank of America's record $16.65 billion settlement with several government agencies over the sale of toxic residential mortgage-backed securities (RMBS) has been stalled by an internal disagreement within the U.S. Securities and Exchange Commission (SEC), according to sources familiar with the case in a report from Bloomberg News.

SEC's five commissioners are reportedly disagreeing over whether or not to waive certain sanctions that go into effect when the settlement, which was announced in August 2014, is entered in court. The sanctions, if enacted, could adversely affect Bank of America's asset management business and ability to raise capital.

Bank of America has requested relief from the sanctions, an action that was once routine but is now anything but. Sources say that the two Democratic commissioners refuse to allow Bank of America a pass on the sanctions, while the two Republican commissioners are in favor of waiving the extra penalties. With SEC Chair Mary Jo White not participating due to a conflict, the two Democrats and Republicans are deadlocked on whether or not to waive the additional sanctions, according to sources.

Banks that enter into settlements normally seek waivers from three main sanctions. The two major ones involve a ban on managing mutual funds and a ban on banks raising money for private companies. The third, which would not have as much consequence with Bank of America as the other two, would prevent the bank from issuing its own shares or bonds unless the SEC gives prior approval.

The sources say Bank of America wants to continue seeking investors for private firms. They say the SEC is likely to allow the bank to continue managing mutual funds, but that it is unlikely the SEC will grant the bank the waiver for the other sanctions.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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