Wednesday, October 24, 2012

Feds Slap Bank of America With Landmark $1 Billion Lawsuit

Posted By on Wed, Oct 24, 2012 at 1:22 PM

The U.S. government sued Bank of America today for $1 billion over allegedly bad loans issued to Fannie Mae and Freddie Mac. The litigation targets Countrywide Financial, which was later bought by Bank of America.

U.S. Attorney Preet Bharara told The Associated Press that the mortgage company's procedures were designed to process loans at high speed, resulting in thousands of fraudulent loans.

Today's landmark suit is the first civil action brought by the U.S. Justice Department over loans later sold to government-controlled housing giants Fannie and Freddie.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” said Bharara.

The case is the latest legal headache for Bank of America over its acquisition spree during the financial crisis.
In September, it paid $2.4 billion to settle a securities class-action lawsuit alleging the bank misled investors about its takeover of Merrill Lynch.

Bank of America also announced plans in September to cut 16,000 jobs as part of a restructuring agreement.

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