Who Is Next After Bank Of America Corp (NYSE:BAC) & JPMorgan Chase & Co (NYSE:JPM)?
Charges of fraudulent mortgage practices by Bank Of America Corp’s (NYSE:BAC) Countrywide unit, were proved on Wednesday, following a four-week trial before a federal jury in New York.
The U.S. Department of Justice continues its run of bringing banks and their executives charged with fraud that precipitated the U.S. financial crisis in 2008.
The Bank Of America Corp (NYSE:BAC) story: Risky loans
When Edward O’Donnell, an ex-Countrywide person chose to disclose details of a 2007 mortgage program called ‘HUSTLE,’ for ‘High Speed Swim Lane,’ the Justice Department had enough evidence to press charges and begin investigations.
Hustle program grossly ignored quality control on the checks required for processing loans, instead interested only in loan volume and speed at which employees processed such loans.
O’Donnell, as the whistle blower will also earn $1.6million for his involvement in the case.
Four week Trail finds Bank Of America Corp (NYSE:BAC) liable
The jury consisting of four men and six women found the bank was liable for processing high-risk home loans and selling them Fannie Mae and Freddie Mac, two government mortgage service providers.
BAC will now be liable for loss suffered by these two organizations to the tune of $848.2million and would attract additional penalty as well. These would be known only by December 5.
First JPMorgan Chase & Co (NYSE:JPM), now Bank Of America Corp (NYSE:BAC), next who?
Earlier this month, U.S. Justice Team’s discussions with JPMorgan Chase & Co (NYSE:JPM) for fraudulent use of Mortgage backed securities (MBS) led to a settlement of $13 billion.
Meanwhile, BAC spokesperson Lawrence Grayson admitted that the bank was evaluating options for appeal as Countrywide was acquired only in 2008 by BAC. However, Rebecca Mairone, the former head of Countrywide was found to be responsible for some of the decisions made during the Hustle program. Her lawyer, Marc Mukasey, contented that the fight would continue for her.
Following the verdict, the Justice Department has finally begun the process of settling allegations of financial crisis by banks and their executives leading to the financial crisis in 2008.