by: Jim Bradley Updated:
CHARLOTTE, N.C. - Bank of America said Wednesday that is second quarter earnings were hit by higher litigation expenses.
The Charlotte-based bank earned $2.3 billion compared to $3.6 billion in the same period last year.
That's a 43 percent drop.
The bank's profits would have been significantly higher but executives Wednesday said they set aside $4 billion to pay for legal fees associated with bad mortgages from the financial crisis in 2008.
"It's just a huge amount of money the bank has had to pay in penalties and fines and in mortgage restructurings and everything else that has been a total distraction," said banking expert Tony Plath.
Plath said the litigation fees will likely grow again soon. Bank of America is reportedly negotiating a settlement with the U.S. Department of Justice that sued Bank of America over bad mortgages and is said to be demanding $17 billion from the bank.
Until those lawsuits are dealt with, Plath said the bank will continue to struggle to be profitable.
"This is primarily the last big piece that they have to settle. So once they get through, this it's over. But they must get through it and they're not there yet," said Plath.
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