US govt sues Bank of America for defrauding investors prior to housing crash


US govt sues Bank of America for defrauding investors prior to housing crash

Hello Everyone!

Well, when the Bank of America is sued by both the US Security Exchange Commission (SEC) and Justice Department…  Please share any feelings you have about a pillar of Wall Street and US Banking being sued for “defrauding investors by massively underestimating the quality of mortgage-backed securities prior to the 2008 housing market crash and US recession.”

Enjoy,  Ed Reidhead

US govt sues Bank of America for defrauding investors prior to housing crash

The US government has filed two lawsuits against Bank of America accusing the company of defrauding investors by massively underestimating the quality of mortgage-backed securities prior to the 2008 housing market crash and US recession.

The US Security Exchange Commission (SEC) and Justice Department each filed a lawsuit in US District Court in Charlotte, North Carolina on Tuesday, accusing Bank of America of knowingly minimizing the risk associated with $850 million worth of securities backed by residential mortgages.

I applaud Attorney General Holder for taking this important step toward holding Bank of America accountable for packaging and selling toxic loans to investors and brokers, a key cause of the housing collapse that crashed our economy and still plagues communities to this day,” New York Attorney General Eric Schneidermann said in a statement.

US President Barack Obama has promised to hold Wall Street accountable for corruption and malfeasance which took place during the housing boom. Attorney General Eric Holder said the lawsuit is “the latest step forward in the Justice Department’s ongoing efforts to hold accountable those who engage in fraudulent or irresponsible conduct.”

Bank of America said it was expecting the lawsuit in a corporate filing last week, according to The New York Times.

The Justice Department lawsuit claims an “unprecedented portion” of the mortgages originated with brokers unaffiliated with the bank. Then-CEO Ken Lewis, the suit says, referred to the so-called wholesale loans as “toxic waste.”

Prosecutors say that while Bank of America assembled securities in 2008, employees were pressured to process as many mortgage evaluations as possible in order to maximize profits. More than 40 per cent of the mortgages did not meet the underwriting qualifications and were summarily ignored.

According to the lawsuit, one employee said her job was to “basically validate the loans” instead of reviewing them to find any potential flaws. Upon raising the issue with her superiors, she was told to “keep her opinions to herself,” prosecutors said.

The two suits accuse Bank of America – which has over 260,000 employees across the world – of lying to investors and failing to disclose essential information. A Justice Department statement declared that a “material number” of mortgages “failed to materially adhere to Bank of America’s underwriting standards.”

Bank of America stock shares fell by one per cent after the news broke, but have increased by 97 per cent over the past year. In a statement released Tuesday, the company denied the transactions were tainted in any way.

These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that,” the statement said.

The loans in this pool performed better than loans with similar characteristics originated and securitized at the same time by other financial institutions. We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result.”

Advertisements

About Edward Freeman Fly... WhoRU
I am that I am... I am experiencing this "physical universe" and ponder the contrasting "non physical universe" right here, right now. I am the open space, I am the no thing in which it all happens... I live fully from the heart and mind, I am now stepping up to my responsibility to share All I've experienced and learned so far during my life time here. I am open to all the possibilities... Are we living in a virtual reality, a flat earth model... I am open to All the possibilities... I will be speaking publically, writing books and presenting the many possibilities of the nature of our shared consciousness/reality very soon... Peace, Freedom, Liberty and Love to All my Brothers and Sisters... far and wide... I can be contacted at: ereidhead@gmail.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: