BofA Boss Ordered to Testify in $3.6B Bonus Probe

Or else face public action

(NEWSER) - Federal regulators have warned Bank of America’s board that the bank will face a public enforcement action if it doesn’t take steps to fix its corporate governance, risk management, and liquidity, sources tell the Wall Street Journal . The bank has been operating under a confidential memorandum of understanding directing it to fix those things since May 2009, but in recent months regulators have warned the bank that if it doesn’t shape up, that informal agreement will become a formal, public order. More»

Meanwhile, Fannie employees suspended amidst federal probe

(NEWSER) - Fannie Mae and Freddie Mac execs banked Wall Street-esque paychecks this year for meeting what Politico terms “modest performance targets” in modifying troubled mortgages. Ten top executives at the two firms received a combined $12.79 million in bonuses, agency records show, and that’s not counting a second 2010 bonus installment that hasn’t been reported yet. Those paydays are still down 40% from their 2008 heyday, but some lawmakers were still outraged. More»

Says it was misled about quality of mortgage-backed securities

(NEWSER) - With the Justice Department filing few criminal charges related to the financial crisis, AIG is taking action of its own: The mostly taxpayer-owned firm is preparing to sue Bank of America for allegedly misleading it about the quality of Bank of America's mortgage-backed securities—an accusation that gets to the root of the financial crisis. AIG wants to recoup more than $10 billion in losses in what might be the biggest mortgage securities lawsuit by "a single investor" in history, the New York Times reports. More»

Energy sector leads stocks lower; financials up on BofA settlement

(NEWSER) - Energy issues pushed stocks lower today after indexes hung around opening levels and briefly wandered into positive territory. Bank of America's settlement with the SEC over its acquisition of Merrill Lynch last year boosted financials, the Wall Street Journal reports.

• The Dow fell 18.97 points to close at 10,383.38.
• The Nasdaq lost 1.84, settling at 2,242.03.
• The S&P 500 dropped 1.16 to close at 1,108.01.

Spendthrift John Thain gets hands on new troubled company

(NEWSER) - The CEO who spent $1.2 million renovating his office and arranged $3.6 billion in executive bonuses while his company, Merrill Lynch, was circling the toilet bowl, has just been named CEO of CIT Group. John Thain rises to the top of a public company again a year after he was jettisoned by Bank of America after it acquired Merrill Lynch. Thain inherits a firm struggling since former Merrill colleague and ex-CEO Jeffrey Peek immersed the company in subprime mortage lending before its bankruptcy. More»