Bank of America has agreed to pay $7.65 million to settle federal charges that it violated record keeping and internal rules in overstating its capital levels, the New York Times DealBook blog reported yesterday. The Securities and Exchange Commission said that the bank had failed for years to properly deduct losses on a large portfolio of structured notes and other financial instruments that it acquired when it bought Merrill Lynch in early 2009. As a result of the flawed calculations, the bank had overstated the capital cushion that regulators require the bank to hold by about $4 billion. The $7.65 million penalty, which is minuscule compared with the $16.65 billion the bank had paid to settle its mortgage-related misdeeds, caps an embarrassing flub for Bank of America. In March, the bank had easily passed the Federal Reserve’s annual stress test, gaining the regulator’s approval to increase its quarterly dividend for the first time in seven years.
