Bank of America Sued for Mortgage Fraud

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(AP Photo/Eric Risberg)

The U.S. Department of Justice brought a civil fraud lawsuit for more than $1 billion against Bank of America Wednesday afternoon. It’s the first lawsuit of its kind to be brought against one of the big mortgage financiers — Bank of America bought Countrywide Financial, a mortgage giant that sold thousands of toxic loans to Freddie Mac and Fannie Mae, in July 2008, one month before the financial collapse.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” the prosecuting attorney, Preet Bharara, said in a statement yesterday afternoon.

“As alleged, through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As alleged, 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.”

The lawsuit also says that the “Hustle” (or “HSSL,” for “High-Speed Swim Lane”) program continued through 2009, long after Bank of America purchased Countrywide.

ProPublica reports that the government bailout of Fannie and Freddie — required in part because of mortgages Fannie and Freddie purchased from Countrywide and packaged into securities — has cost American taxpayers $187.5 billion. The former special investigator general in charge of oversight of the Troubled Asset Relief Program (TARP) bailout, Neil Barofsky, will be on Moyers & Company this weekend.

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  • justme

    And they want FEWER regulations?!

  • Anonymous

    I hope Matt Taibbi is a consultant on this case! This is good news, and given the amount of time that’s passed, I hope that means the feds are able to make a strong case for conviction and restitution for homeowners who’ve been harmed – greatly.

  • Anonymous

    Window dressing for Obama’s reelection. This should have been prosecuted (and CRIMINAL prosecutions, not just civil) three years ago. This case will go nowhere after the election, or will settle for a “record” fine (about an hour’s worth of banking profits) and no admission of wrongdoing. And the beat goes on…(voted Obama 2008)

  • George Gates

    Ha, ha, ha! Yea, win a large corporate lawsuit, uh huh.. (the same group that makes the illegal laws legal in the first place!). Good luck on winning significant money from ANY lawsuits! They OWN the political system from the top down.

  • Janice Peters-Hill

    Great news. Hope they are prosecuted to the fullest extent of the law. To the comment of “window dressing” there are those people who find fault with President Obama no matter what he does. As for me, I will continue to support and respect him.

  • justice4all

    Bank of America also happens to be Mitt Romney’s 2nd highest campaign contributor this election year, in good company with all of the other Wall Street banks who have contributed large sums of money to his campaign. Interesting – no Wall Street banks in Obama’s top list –

  • Anonymous

    True, but check who was Obama’s largest single donor in 2008. And check to see whom there have been no- none- zero- zip prosecutions against for fraud and perjury before Congress connected to the financial meltdown (even though the Levin Commission sent the evidence with recommendations for prosecution to the DOJ).

  • justice4all

    I was responding to your concern that this lawsuit might not get resolved as strongly as you (or the rest of America, including me) would like; as well as your implication that you might vote for Romney. My point was simply that a vote for Romney will surely make your amnesty scenario a reality. Obviously B.O.A. knew the lawsuit was coming and is one of the reasons why they’re Romney’s #2 campaign contributor. Obama is certainly no guarantee amnesty won’t happen, but obviously B.O.A. thinks they will be more likely to persuade Romney. Either way, an amnesty deal would send a dangerous message to other banks and financial institutions (of which also gave Romney massive donations), that it’s OK to break the law and not only get away with it, but profit off it at taxpayers’ expense.

  • Anonymous

    Agreed. But let me dissuade you of one thought. There is no way in hell I would vote for Romney, even on a bet. As disappointed and angry as I am with Obama, I feel Romney would be much worse for the nation. That doesn’t mean I will (or won’t) vote for Obama. Perhaps I may vote Gary Johnson or another, but I certainly will not vote Romney. Also, my disgust with Obama has nothing to do with the economy, which everyone else seems to fault him on. On that, he came into a bad storm and has been sabotaged by an intransigent opposition in his attempts to address it pretty much all the way. My problems stem from his putting some of the Bush policies on steroids, his abysmal record on civil rights, complete reversals on some of his campaign positions, and his protection and rewarding of Wall St. (and sorry, but Dodd-Frank is a joke that was weakened form its original weak version under White House pressure). In short, Obama is slightly (but not much) better than the alternative.

  • justice4all

    OK, now I feel better! Thanks for clarifying. We’re both on the same page and I definitely agree that Obama’s punishment of Wall Street amounted to barely more than a slap on the wrist. It’s a joke.
    I’m from a democratic not swing state so given that, I plan to write in Bernie Sanders’ name (U.S. Senator from Vermont), even though he’s not a presidential candidate. Other than starting a revolution, the best I think anyone from a non-swing state can do voting-wise is simply attempt to make a statement, weak as it may be.
    If Bernie had been president for the last 8 years we may still not have been in a great place, but I seriously doubt we’d be 2 months away from falling off a Financial Cliff (depending of course on other variables such as who had been elected to Congress). We’d also probably be a lot farther along on the Farm Bill, sustainable agriculture and overhauling our food system since he is a strong proponent of that as well as banking reform and balancing the budget. Here’s just one of many Bernie’s classics, one of my personal favorites, demanding Ben Bernanke to “show me the money”! —

  • Anonymous

    Yeah, my third-party vote (assuming) is also because I am in a solid blue state. And if Bernie, he would have my vote. I am a big fan. We don’t agree on everything (who does?), but we do more often than not, and the biggest attraction for Bernie is that he IS NOT BOUGHT!! He seems to be truly independent.

  • Anonymous

    If Bernie “ran” is what I meant to type.

  • tb

    i can not help but respond to citizen vet and justice4all. bernie is the man, however, he is not running. so why not vote for someone who is…gary j. i am tired of feeling that my vote options are like choosing to cut off my right arm or left arm. i voted obama in ’08, knowing what i was getting – rhetoric, hoping that they wouldn’t turn to lies. i’m done,
    no more voting for the party, vote for the person. the only way to bring more options to the table (another party) is to take action…vote other than red/blue.