Wednesday, October 24, 2012

Feds Sue Bank of America For "Brazen Fraud"

Federal prosecutors in New York sued Bank of America on Wednesday, accusing the giant bank of carrying out a mortgage scheme that defrauded the government during the depths of the financial crisis.

In a civil complaint that seeks to collect $1 billion in damages from the bank, the Justice Department took aim at a home loan program known as the “hustle,” a venture that Bank of America inherited with its purchase of Countrywide Financial during the crisis. Prosecutors say the effort, created in 2007 but kept alive through 2009 by Bank of America, was designed to churn out mortgages at a rapid pace without proper checks on wrongdoing. The bank then sold the “defective” loans to Fannie Mae and Freddie Mac, the government-controlled housing giants, which were stuck with heavy losses and a glut of foreclosed properties.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Preet Bharara, the United States attorney in Manhattan, said in a statement. Mr. Bharara brought the case with the inspector general of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, and the government watchdog for the bank bailout program.
Read the rest here.

Anyone want to take odds on how many people land in prison over this? Banks are the enemy.


off2 said...

It would be interesting, if one had the time, to do an analysis of BoA's political contributions. Bii, tGf

Visibilium said...

No one will go to jail. It's a civil complaint. We're still praying for your return to objectivity.

The Anti-Gnostic said...

I cannot imagine any scenario where BOA's fiduciary officers, corporate lawyers and shareholders would approve a deal where BOA assumed Countrywide's massive liabilities. This buy-out was approved and IIRC actively encouraged by the Fed and the USG. Warren Buffet blessed the marriage with a $4B stake in BOA. If I were him I'd be calling the White House every day until the complaint is dropped. And poor, innocent Fannie and Freddie, please.

I'm no cheerleader for banks, but this smells to high heaven.

Michael said...

I don't know if this is the same lawsuit, but it appears that CNBC broke this news, and that a CNBC executive's family were murdered within hours of the report:

They reference the lawsuit itself here:

Sinister stuff, indeed.