Bank of America Corp. has agreed to pay $55 million to settle claims of former employees of Countrywide Financial Corp. who contended that the Calabasas home lender breached its obligation to manage their retirement funds prudently.
Plaintiff attorneys said in a federal court filing Friday that the proposed settlement of a class-action lawsuit "represents an excellent recovery" for the former employees. Before legal fees, it would provide about $1,000 for each of the 55,000 employees Countrywide had at its peak.
The former No. 1 mortgage lender was running out of cash when it agreed last year to be acquired by Bank of America, which is facing a blizzard of claims accusing Countrywide and its former officers and directors of embracing a hugely risky lending strategy while contending publicly that the company was well run.
Bank of America denied any wrongdoing in settling the suit, filed before U.S. District Judge John F. Walter in Los Angeles. Spokeswoman Shirley Norton said the bank wanted to avoid the time and expense of litigation.
The pact also settles the employees' retirement-related claims against more than two dozen former Countrywide board members and executives, including Chief Executive Angelo R. Mozilo and President Stanford L. Kurland. All the individuals denied wrongdoing as well.
Walters, who must approve the settlement for it to become final, scheduled a fairness hearing for Aug. 24.