Bank of America Corp (NYSE:BAC) back in court to fight fraud lawsuit
The Bank of America Corp (NYSE:BAC) had requested a court to dismiss the case that had U.S government had filed against it. The allegation was that the bank had sold billions of dollars worth of toxic-mortgage loans to Freddie Mac and Fannie Mae. The case is back on track and set to go on trial in September.
The judge avers
The order was made public yesterday. Jed Rakoff, the United States’ District Court Judge said that there some genuine factual disputes that are justification enough that the case against the bank should continue. This order now clears the path for the case to continue as slated for the 23 September jury-trial. Very few of the prominent cases that were tied to the financial-crises have actually gone to trial. In addition, Rakoff said that he is expecting to decide which theories he will permit the government to pursue, before the trail.
He also said that in due course, he will explain the reasons behind Tuesday’s order. The United States DoJ had sued BAC last October. This joined the whistleblower lawsuit that Edward O-Donnell, the Countrywide Financial Corp executive, had originally brought. BAC had acquired Countrywide in 2008 July. The allegation was that Countrywide had caused over $1B of taxpayer-losses by selling numerous defective home-loans to Freddie Mac and Fannie Mae.
When speed kills
The government had seized these mortgage-financers in 2008 September. The U.S government said that the loans had gone through a program tagged the “High Speed Swim Lane” or the “Hustle” that had been devised by Countrywide in 2007. This had been launched to speed-up processing of home loans.
All the outlined safeguards had been ignored and no steps were taken to ensure that the loans were fraud-free. Lawrence Grayson, a BAC spokesperson said that this particular program had ended even before the bank had purchased Countrywide and that they believe there was no fraud at all.