The largest private bank in the United States will reimburse investors billions of dollars for investments that plunged in value when the housing market collapsed.

Bank of America announced the $8.5 billion settlement Wednesday, saying the deal would minimize “future economic uncertainty.”

A group of 22 investors, including several large financial firms, had been demanding compensation from the private bank over investments known as mortgage-backed securities.

The value of the securities was based on $424 billion in home loans issued by a separate financial institution which Bank of America bought in 2008. The investors – including the Federal Reserve Bank of New York – said the loans were so risky they never should have been sold as investments.

Bank of America says the settlement will erase all of its earnings for the first half of this year.

The deal also sets up the possibility of similar deals with other large U.S. banks that face similar complaints.

The collapse of the U.S. housing market is one of the factors that helped sparked the recent U.S. recession.