$16.65B Bank of America Settlement Will Settle Nothing

Updated from 6:05 pm Wednesday to include details of the settlement following its official announcement Thursday morning.

NEW YORK (TheStreet) -- Bank of America's (BAC)   settlement with the U.S. Justice Department over fraudulent mortgage securities the bank sold to investors is less punitive than the $16.65 billion price tag suggests and does not address the wrongs it purports to remedy.

As was the case with a $13 billion JPMorgan Chase  (JPM) settlement in November and a $7 billion settlement with Citigroup  (C) last month, the Bank of America settlement will include a multibillion non-cash component. 

While the $9.65 billion cash figure is higher than the $9 billion that sources described to TheStreet earlier this month, it nonetheless would give the bank $7 billion in credit for modifying mortgages that may already have been in its best interest to modify. 

Indeed, neither JPMorgan nor Citigroup, in their previous deals, took any specific charges related to the consumer relief portion of the settlement, Bove pointed out in a phone interview with TheStreet

Read More: Bank of America Settlement Will Again Bypass Hardest Hit States

What's more, as TheStreet indicated in its earlier report, none of the cash will go to Florida or Nevada, the states hardest hit by the mortgage crisis, and where home prices are still about 30% below their peak. Instead, $300 million in cash will go to New York state, where home prices have already recovered, because New York State Attorney General Eric Schneiderman has better legal tools and has been more aggressive in bringing mortgage claims against big banks. Other states receiving cash settlements are California, Illinois, Maryland, Kentucky and Delaware.

As was the case with the JPMorgan and Citigroup deals, very little of the cash will go to investors who lost money as a result of the mortgage-backed securities at issue in the case.

The legal settlement also will prevent the public from knowing all the facts investigators have unearthed about the bank that sold more problem mortgages than any other. That's one of the reasons Better Markets, a nonprofit Wall Street watchdog, has filed suit against the Justice Department, challenging the JPMorgan settlement.

Then there's the question of whether the money Bank of America pays will ever find its way to home owners. Some of the money from the $25 billion so-called National Mortgage Settlement in 2012 did make it to home owners, though some went to close gaps in state budgets. More than $400 million JPMorgan paid to New York as part of its November settlement is still stuck in political limbo, after Gov. Andrew Cuomo and the state legislature wrested it away from Schneiderman.

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