Bank of America (BAC): Good Bank or Bad Bank?

For those familiar with the savings-and-loan crisis of the 1980s, they will recall how the financial institutions created two different types of structures to deal with mortgages; that's what Bank of America (NYSE:BAc) says they're going to do as well.

Terry Laughlin, who is overseeing the resolution of BofA’s troubled mortgages, said, “We are creating a classic good bank, bad bank structure."

“We’re going to get after this, we’re going to do it the right way and we’re going to put it to bed in the next 36 months,” he added.

The "bad bank" will include about 6.7 million loans with approximately $1 trillion in outstanding principal.

Bank of America CEO Brian Moynihan said the separation of mortgages into the good-bank bad-bank structure should be finished by the end of March.

The bank closed Tuesday at $14.69, gaining $0.66, or 4.70 percent.