BofA Raises Estimate Of Possible Legal Losses -Filing

Bank of America Corp. (BAC) increased the estimate of its possible legal losses to as much as $2.3 billion above what it has already set aside, according to a filing Thursday.

Last quarter, the bank's top range for estimated worst-case scenarios was $1.6 billion.

The increased estimate shows that even as the bank tries to put one major legal hurdle behind it by taking huge charges in the quarter, it remains facing lots of legal uncertainties.

Banks have been pressured in recent quarters by regulators to increase their disclosures on how much they could lose if lawsuits and various other legal headaches turn into nightmare scenarios. The banks already set aside legal reserves, but the extra estimate is the worst-case scenario that they can "reasonably" estimate.

Bank of America, the nation's biggest bank by assets and deposits, said in the filing its range is from nothing to $2.3 billion, compared to a range of $150 million to $1.6 billion last quarter.

The increased worst-case scenario comes in the same quarter the bank took a massive $8.5 billion charge to settle a large part of its legal woes from mortgage-repurchase claims. The bank said in the filing Thursday that as part of the proposed settlement, which pays big-name investors such as BlackRock Inc. (BLK) for mortgage-backed securities that soured, it also would pay $100 million in legal fees to the plaintiffs' counsel and the trustee in the case.

The settlement, however, still requires a judge's approval. Several investors have requested to intervene in the settlement, and the bank said Thursday if the deal isn't closed as expected, the cost to the bank could rise substantially.

Shares closed down 7.4% at $8.83 Thursday amid a broad market plunge, and are now down 34% year to date, partially on investor concerns about the bank's legal woes.

-By David Benoit, Dow Jones Newswires; 212-416-2458; david.benoit@dowjones.com

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