Bank of America is going to fork over $8.5 billion to mortgage-bond investors lied to by Countrywide Financial, the Wall Street Journal scoops. But the feds can’t find anybody at the company to charge with a crime?

You don’t settle anything for $8.5 billion unless you know you’ve done a lot of things very wrong. In this case, it was doings at Angelo Mozilo’s predatory lender Countrywide before BofA foolishly agreed to buy it in 2008.

The New York Times doesn’t ever get around to telling us just what Countrywide did that would prompt Bank of America to fork over such an ungodly amount of money. We’re told the investments “soured” and that Countrywide “symbolizes the excesses of the housing boom” and down in the tenth graph that BofA, JPMorgan Chase, and Citigroup “bundled troubled home loans and sold them as sound investments,” but that doesn’t really tell us what happened here.

The Journal is a bit better:

The dispute between Bank of America and the mortgage investors began last fall when they alleged in a letter to the bank that securities they scooped up before the financial crisis from Countrywide Financial Corp. were full of loans that didn’t meet sellers’ promises about the quality of the borrowers or the collateral. The investors also alleged Countrywide failed to maintain accurate files while managing the loans.

But I think we could have used some more detail on what exactly happened there. Both stories are awfully BofA-centric, focusing on what the settlement means for the bank. That’s fine, but more context on what it means for investors and what this tells us about what happened during the bubble would have been nice. Like, were there any actual bad actors here, or did the toxic CDOs assemble themselves and pitch lies to investors about their contents?

Both papers report that the settlement would cover all $424 billion of mortgage bonds issued by Countrywide. Yves Smith points out that means the $8.5 billion settlement is 2 percent of the total, which she calls a “screaming bargain.” One thing I’d like to have known is how much those $424 billion in bonds are worth now or at least a rough estimate of the value they’ve lost.

The Journal notes that this will only increase the pressure on Bank of America’s peers to agree to giant settlements for screwing investors.

Smith also says this about why BofA settled:

…the issue would not just be Bank of America’s exposure to losses but the damage that could be done in discovery. And that damage comes on multiple fronts: the continuing bad press and resultant damage to the stock price of the sordid details of of how dreadful Countrywide was, and the revelations serving as grist for litigation by other investors….

More broadly, this development at a minimum shows that Bank of America to be running scared. I wonder what other shoes might be about to drop on the mortgage front.

I’m glad Smith brings that up about discovery. It’s almost never mentioned in news coverage of settlements, but it ought to be: A good part of the point is to stop damaging information from coming out in court.

The size of this settlement also raises questions about what federal regulators are doing. How come private investors can do this but regulators can’t?

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.