Bank of America is not having a good day week month quarter year.
Their stock price has tanked, from $15/share to $6/share. Their $5 fee for debit cards has not been, shall we say, the public relations tour de force that some halfwitted marketing 'expert' seems to have envisioned. They've had to pay out massive settlements already because of their practices with more likely on the way. The Vice President has blasted them, and Dick Durbin has called for their customers to take their money out of the bank.
And yesterday the Attorney General of California, Kamala Harris, supoenaed Bank of America in connection with, what else, mortgage-backed securities, as reported by the LA Times today.
Investigators with the state attorney general's office have subpoenaed Bank of America Corp. in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to a person familiar with the probe.
The state is trying to determine whether the bank and its Countrywide Financial subsidiary sold investments backed by risky mortgages to institutional and private investors in California under false pretenses, according to the person, who was not authorized to speak publicly and requested confidentiality.
Like there's any question? Of course they sold the damned things under false pretenses: namely, totally misrepresenting the risk involved.
((CountryWide, now owned by BofA)) bundled up many of the riskiest loans to back private-label securities that proved toxic to banks and investors. It also lobbied heavily to relax the standards at government-sponsored mortgage finance companies Freddie Mac and Fannie Mae, which are now wards of the government and have cost taxpayers billions of dollars.
You may recall that some weeks ago, Harris withdrew California from negotiations with the Federal government and the big banks on a settlement of the mortgage fraud debacle, claiming that California would not be getting a fair deal.
Now Harris may be tightening the screws, both trying to get a better deal and probing further into this god-awful mess.
"I think the California AG is seeking leverage here," Nancy Bush, an independent bank analyst and contributing editor to research firm SNL Financial, said... "why not bring a little extra pressure to bear?"
State and federal officials are also trying to entice California back into talks, this week floating an idea for helping creditworthy homeowners refinance loans that are underwater, or higher than the values of the homes. But the subpoenas could also indicate that Atty. Gen. Kamala Harris is widening her own probe of big mortgage lenders.
Harris has created a mortgage fraud strike force with a mandate of looking into all aspects of mortgage fraud, including securitization... Under California's False Claims Act, which makes it a crime to defraud the state, damages of up to three times the amount of the claim can be awarded if the victim was an institutional investor, such as one of the state's pension funds.
Harris, formerly San Francisco's District Attorney, won in a squeaker of election in November 2010. If she can really pull off taking it to the Big Banks as she seems to be threatening, she will have made a name for herself that will serve her well in future political forays. After all
"I fought the banks and... I won!"
is going to be a pretty good slogan down the road, don't you think?
9:17 PM PT: Check out another seemingly nefarious move by BofA as diaried here
9:27 PM PT: From the Overnight News Digest
An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.