U.S. sues B of A for $1 billion

bofa.jpgFederal prosecutors allege in a civil complaint that the bank defrauded the government through a mortgage scheme that was carried out during the financial crisis. It involves the former Countrywide Financial, which B of A bought in 2008. U.S. Attorney Preet Bharara called the actions "spectacularly brazen in scope." The bank already has a bunch of lawsuits that have yet to be resolved. From DealBook:

The Justice Department cited the bank's home loan program known as the "hustle." Prosecutors say the program, which Bank of America inherited with its purchase of Countrywide Financial during the crisis, 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 more than $1 billion in losses and many foreclosures.

From the WSJ:

The bank "made disastrously bad loans and stuck taxpayers with the bill," Mr. Bharara said in a statement. "Countrywide and Bank of America systematically removed every check in favor of its own balance--they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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