Bank of America cooperating in local authority bond inquiry

Feb 10, 2007, 14:43 GMT

Charlotte, North Carolina - The Bank of America is cooperating in an inquiry by the US Department of Justice into bidding practices for local authority bonds, it said late Friday (early Saturday GMT) in Charlotte, North Carolina.

The second largest US bank said it had made an amnesty agreement with the Department of Justice. It had passed on information to the ministry before the inquiry began and continued to cooperate.

The ministry, the US Securities and Exchange Commission (SEC) and the Tax Authority had started an inquiry into the sector, the bank said.

The Bank of America paid 14.7 million dollars to the Tax Authority.

The inquiry aims to find out how municipalities, authorities and other public institutions invested the money from local authority bonds before they finally went to their declared purpose, such as the building of schools, roads, bridges or other projects.

The authorities want to find out whether banks had colluded over bidding for the money's temporary investment.

Local authority bonds worth 380 billion dollars were issued in the US in 2006. The outstanding volume of the bonds amounted to more than 2.3 trillion dollars, The Wall Street Journal said in in its online edition Saturday.