Shares of Bank of America (BAC) declined on Monday as investors grew increasingly concerned about the potential financial impact of a large settlement related to mortgage-backed securities. The bank is reportedly in negotiations with various parties, including government agencies and institutional investors, to resolve claims stemming from the sale of these securities in the lead-up to the 2008 financial crisis.

The size of the potential settlement remains a key point of contention, with estimates ranging from several billion to tens of billions of dollars. Analysts have expressed concern that a settlement at the higher end of this range could significantly impact Bank of America’s capital reserves and future profitability.

Several factors are contributing to the market’s unease:

• Uncertainty about the final settlement amount: The lack of clarity regarding the ultimate cost of the settlement is weighing on investor sentiment.
• Potential impact on capital: A large settlement could force Bank of America to raise additional capital, potentially diluting existing shareholders’ equity.
• Legal and regulatory risks: The ongoing investigations and negotiations highlight the significant legal and regulatory risks facing the banking industry.

Bank of America has declined to comment on the specifics of the ongoing negotiations. However, the bank has stated that it is committed to resolving these legacy issues in a responsible and timely manner.

The decline in Bank of America’s share price reflects the broader concerns about the potential liabilities facing major financial institutions related to their involvement in the mortgage-backed securities market. Investors will be closely monitoring developments in this area as the negotiations progress.