Bank of America is to cooperate with the US Department of Justice in an inquiry into bidding practices for local authority bonds. Bank of America has confirmed that it has had talks with federal prosecutors.
Bank of America have already paid USD14.7 million to the Internal Revenue Service (IRS) to settle municipal bond claims. The inquiry into the municipal-bond market by SEC, IRS and federal prosecutors is currently underway and is to look at how public institutions invest the capital raised through municipal bond issue.
US banks will be looked at to see whether they colluded over bids for money generated by bonds to be temporarily invested. The US issued municipal bonds worth around USD380 million during 2006, with an outstanding volume amounting to over USD2.3 trillion.