Bank of America's (NYSE:BAC) stock rallied on the news that it had agreed to an $8.5 billion settlement 22 institutional investors over private-label putback claims.

Breakingviews puts it in some perspective: Bank of America "Has now paid or earmarked at least $30 billion to cover claims and related legal and good will write-down costs on nonagency mortgages--almost all related to Countrywide. That's more than seven times what [former CEO Ken] Lewis paid for Countrywide."

Recall that Bank of America, under Lewis, bought the mortgage unit for $2.5 billion in stock, in a deal that at the time was trumpeted as a coup. The real costs of the fiasco may ultimately be higher still. The bank will take a charge of $20.4 billion for the second quarter, much of which was necessitated in some form by Countrywide. The charge wipes out all earnings generated this year and makes higher dividends that much more unlikely.

Many in the industry consider the Bank of America purchase of Countrywide one of the worst deals ever struck by a top bank. It helped spell the end of Lewis's career, and sealed his legacy as the man who presided over a bank that nearly ran off a cliff. It was the deal that trumped so many other good deals, unfortunately. In any case, it's tempting to think that Bank of America is now finally digesting the ill-fated purchase. Does this mean that the bank is finally clear of the Countrywide liability? There are still some loose ends perhaps. But this is a definitive strike to get back to get past this.

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