Kentucky Retirement Systems is set to receive $23M as part of a history-making settlement between the Justice Department and Bank of America.
Flanked by six top state prosecutors, including Kentucky Attorney General Jack Conway, U.S. Attorney General Eric Holder made the announcement Thursday in Washington.
"The Department of Justice has reached an agreement with Bank of America totaling over $16.6B in penalties and consumer relief. This constitutes the single largest civil settlement with a single entity in history," he said.
While the deal represents by far the biggest settlement to come out of the 2008 mortgage crisis, officials in charge of Kentucky’s pension system say the $23M allotted for KRS is still dwarfed by its $17.6B in unfunded liabilities - the worst in the country according to Fitch Ratings.
The deal is the result of more than a dozen investigations that uncovered efforts to mislead investors about high-risk mortgage-backed securities. Conway told reporters it was “clear that Bank of America defrauded our pension system when it was sold these high-risk products, and today we are holding them accountable.”
Investors lost billions of dollars when the value of the securities collapsed in the run-up to the global financial crisis. KRS is estimated to have suffered a $21M loss as a result of securities it purchased from Bank of America and related companies.
Conway told reporters Thursday, "If someone wants to say this is not much in the grand scheme of things... I acknowledge that, but I am unaware of any securities fraud recovery of this size going directly back to the retirement systems."
In addition, Kentucky is also set to receive part of a $150 million dollar penalty for other services.