Bank of America has agreed to pay $8.5 billion to settle lawsuits brought against its Countrywide unit for sloppy mortgage underwriting during the housing boom.
$8.5 billion is a huge amount of money, but it's tiny compared to the face value of the mortgages in question ($424 billion) and the principal still outstanding on those mortgages ($221 billion). So investors have acted with relief and bid up Bank of America's stock a few percentage points.
The bank is still exposed to securities industry lawsuits and other mortgage-related litigation, but this settlement should begin to reassure investors that Bank of America's balance sheet won't get completely nuked by a devastating ruling.
It will also begin to end the nightmare that began with Bank of America buying Countrywide at the top of the housing boom, only to see the company collapse and nearly take Bank of America down with it when the bubble burst.
A judge still has to approve the settlement.