NEW YORK (Reuters) - Bank of America Corp was found liable for fraud on Wednesday on claims related to defective mortgages sold by its Countrywide unit, a major win for the U.S. government in one of the few big trials stemming from the financial crisis.
Following a four-week trial, a federal jury in Manhattan found the Charlotte, North Carolina bank liable on one civil fraud charge. Countrywide originated shoddy home loans in a process called "Hustle" and sold them to government mortgage giants Fannie Mae and Freddie Mac , the government said.
Is it possible some of these loans were incorporated into tranches purchased from both FMs by publicly traded REITs? If so, would these REITs have legal recourse to sue?
A lot of these bank buyouts at the time were occurring under pressure by the Fed as the Fed was trying to save the banking system. Now I'm sure that B of A is wishing that they had given the Fed the finger. No good deeds go unpunished.
The fact is that if countrywide had gone bankrupt, which is what would have happened had B of A not bought them, there would be no one to sue. If B of A had been smart they would have cut a deal to let Countrywide go bankrupt first so that all their legal liabilities would have been wiped clean and then bought them after the fact. Then none of this would be happening. You would think that they would have been smart enough to do this as this is the normal thing that people do in circumstances like this. But I guess the Fed was worried that if Countrywide declared bankruptcy that it would send the financial system into a death spiral out of fear of who would go bankrupt next.
B of A should have walked. They didn't do the things that they were charged with, Countrywide did. And that is why they should have allowed them to go bankrupt first. That way the only thing the federal government could have done is prosecuted the Country executives and put them in jail. So instead of thanking B of A for helping to stave off the financial crisis they see an opertunity to make some money and sue them. Politicians are lawyers and thus they act like lawyers. To them it is about what you can do, not what you should do. There is no morality in government. It is always about the money.
Proving the old adage: You'd best be careful of the COMPANY you keep. Or you'll be judged by it. The Bof A made some real bad hookups during those bad times. It's the CEOs fault for giving into coersion by Congressmen implicated in the phony business who were helping their COUNTRY WILD buddy out.the door escaping warrants for his arrest.
its too bad that BAC will get penalized for doing something that the likes of Schumer and Franks badgered them to do. I think whoever wrote letters badgering lenders to lend without following the rules, and verifying income, etc, i think all these guys should have money deducted from their paychecks and pensions. In the civilian world, if you plot ,plan , or enable to do something illegal, you are guilty of conspiracy. No, they can't be liable for their votes in congress, but they could be liable for their letters and speeches putting pressure on them. and who knows if these guys didnt say "BOA, you either lower your lending standards, or we'll legislate them lower for you" I thnik it stinks when they did what they were coherced to do, and are now getting penalized for it.