WASHINGTON: Bank of America agreed yesterday to a record nearly $17 billion deal with US authorities to settle claims it sold risky mortgage securities as safe investments ahead of the 2008 financial crisis, reports AFP.

Under the settlement with the Department of Justice, the Securities and Exchange Commission, and other authorities including individual states, the bank will pay out $9.65 billion in cash and provide $7.0 billion in relief to consumers affected by losses tied to those securities.

The long-negotiated deal resolves a number of civil investigations against the bank and subsidiaries Countrywide Financial and Merrill Lynch, which it took over during the crisis.

“We believe this settlement, which resolves significant remaining mortgage- related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future,” the bank’s chief executive Brian Moynihan said in a statement.

But the deal does not resolve potential criminal cases, especially involving Countrywide, once the country’s largest home-loan issuer, and Countrywide officials.

According to media reports Thursday, prosecutors are building a case against Angelo Mozilo, who in the 2000s built Countrywide into one of the most powerful forces in the US mortgage industry.

Countrywide, acquired by Bank of America in late 2008, is accused of massive issuance of poorly documented, highly risky “subprime” loans that went into default en masse amid the housing market crash.

The settlement took aim at hundreds of billions of dollars’ worth of low- quality home mortgages issued and pooled into securities that were sold to investors by the bank, Merrill Lynch and Countrywide as high-quality investments.

Authorities pointed out how the residential mortgage-backed

securities (RMBS) plummeted in value as the housing market bubble burst in 2006- 2007, and many of the mortgages in the bonds, often more than half, soured, causing investors huge losses.