Government sues Bank of America over mortgages

As with suits that have dogged the bank since 2008, this latest again threatens fines but no jail time


Natasha Lennard
August 7, 2013 5:11PM (UTC)

The slogan from the frenetic days of Occupy marches in Downtown Manhattan replays in my head like a jingle: "Bank of America, Bad for America." Since the 2008 financial crisis, the U.S.'s second largest bank has seen none of its executives face jail time, despite the bank's going through numerous legal battles over a spate of mortgage fraud. So far, the banking giant has paid out $45 billion to settle disputes stemming from the 2008 financial crisis.

This week the SEC and the Justice Department have filed suit against the bank, once again claiming that it misled investors over mortgage securities. Reuters reported on the latest suits, which will again seek settlement fines and no jail time for any bankers involved:

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While most of the cases Bank of America has already confronted pertain to its acquisitions of brokerage Merrill Lynch and home lender Countrywide, the lawsuits filed on Tuesday pertain to mortgages the government said were originated, securitized and sold by Bank of America's legacy businesses.

The residential mortgage-backed securities at issue, known as RMBS, were of a higher credit quality than subprime mortgage bonds and date to about January 2008, the government said, months after many Wall Street banks first reported billions of dollars in write-downs on their holdings of subprime mortgage securities.

The Justice Department and the U.S. Securities and Exchange Commission filed parallel lawsuits in U.S. District Court in Charlotte, North Carolina, accusing Bank of America of making misleading statements and failing to disclose important facts about the pool of mortgages underlying a sale of securities to investors in early 2008.


Natasha Lennard

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email nlennard@salon.com.

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Related Topics ------------------------------------------

Bank Of America Doj Financial Crisis Mortgage Crisis Sec Subprime Wall Street

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