Bank Stocks Surge on $8.5 Billion Bank of America Settlement, Greek Vote (BAC, BLK, JPM, C, WFC, KBE)

Banking stocks are climbing higher early during the Wednesday trading session, after Bank of America Corporation

announced an $8.5 billion settlement with investors who had purchased mortgage backed securities originated by Bank of America Corporation's Countrywide Financial business unit, which Bank of America Corporation bought in 2008. Financial stocks also benefited when the Greek Parliament approved a set of austerity measures that will allow Greece to continue receiving emergency funding from the European Union (

) and the International Monetary Fund (

) and keep the country from defaulting on its debts. A group of powerful investors that included the Federal Reserve Bank of New York, BlackRock, Inc.

and Pacific Investment Management Company, LLC (PIMCO) demanded late last year that they be reimbursed for losses that they took on mortgage backed securities from Countrywide Financial. Countrywide Financial was said to have engaged in unethical business practices that increased its fees at the expense of the group of investors and in violation with agreements made with the investors. These business practices are believed to have played a major role in the real estate bubble that led to the financial crisis of 2008. Although the settlement amount is huge and is expected to wipe out much of the bank's earnings, it's much smaller than the tens of billions of dollars that the bank could have lost, not to mention the public relations damage it faced, if the dispute went to court. Bank of America Corporation (

) Chief Executive Officer Brian Moynihan said, “This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us. We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide.” The bank also said that it "intends to record an additional $5.5 billion provision" to cover future liabilities related to any mortgage backed securities disputes. Bank of America Corporation's stock began climbing higher as rumors of the settlement were widely reported from Tuesday until the bank made an official announcement on Wednesday morning. Bank of America's stock was up nearly 3.3% at $11.18 per share at the time that this article was published. Other banking stocks rose higher on the news of Bank of America's $8.5 billion settlement along with news that the Greek Parliament had passed a new round of austerity measures that will allow the country to continue to receive aid from the European Union (

) and the International Monetary Fund (

) and therefore avoid a default on its national debt. The $8.5 billion Bank of America settlement increases the likelihood that other banks facing the same accusations related to their mortgage back securities businesses will be able to avoid lawsuits by settling their cases. JP Morgan Chase & Co.

was up 1.5% at $40.15 per share, Citigroup, Inc.

was up 1.8% at $40.89 per share, and Wells Fargo & Company

was up 0.6% at $27.64 per share at the time this article was published. The SPDR KBW Bank ETF

, which holds a number of the banking stocks affected by the Bank of America settlement, was up 0.9% at $23.56 per share.