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Tragically named Bank of America will be back in court following a lawsuit brought by federal prosecutors.

From the New York Times:

On Wednesday, federal prosecutors in New York took aim at Bank of America. They accused it of carrying out a scheme, started by its Countrywide Financial unit, that defrauded government-backed mortgage agencies by churning out loans at a rapid pace without proper controls. In a civil suit, prosecutors seek to collect at least $1 billion in penalties from the bank as compensation for the behavior that they say forced taxpayers to guarantee billions in bad loans.
$1 billion is not a lot of money for Bank of America who already repaid the $45 billion TARP loan. But one revelation from the suit contradicts one of BofA's talking points - namely that Countrywide are the real villains and BofA is being victimized due to a poor acquisition done during a crisis.
In the lawsuit on Wednesday, the Justice Department attacked a home loan program known as the “hustle,” which the bank inherited from Countrywide in 2008 and kept alive through 2009.

Prosecutors say the venture was a symbol of Wall Street’s slipshod standards during the mortgage bubble. According to the lawsuit, Countrywide rubber-stamped mortgage loans to risky borrowers and passed them on to Fannie Mae and Freddie Mac, the two government-controlled mortgage financial giants that guaranteed the loans. The two entities were ultimately stuck with heavy losses and a glut of foreclosed properties.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Preet Bharara, the United States attorney in Manhattan, said in a statement.

Brazen works. Especially as Wall Street through surrogates in Congress has tried to shift blame squarely on Freddie and Fannie, institutions it was committing fraud against according to the filings.

Occupy Wall Street before it Occupies You.

Originally posted to Occupy Wall Street on Thu Oct 25, 2012 at 12:08 PM PDT.

Also republished by Income Inequality Kos.

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Comment Preferences

  •  Important to history (3+ / 0-)
    Recommended by:
    DSWright, DRo, trumpeter

    As long as the records in this lawsuit don't get sealed by a settlement agreement, this should give us good insight into the murky relationship between Countrywide and Fannie Mae/Freddie Mac.

    Making sure that they remain fully public should be one of the progressive community's higher priorities.

    There may be other windows into that sick, stupid world, but this would go straight into two of the very biggest players.

    Thoughts?

    Maturity: Doing what you know is right - even though you were told to do it

    by grapes on Thu Oct 25, 2012 at 12:18:42 PM PDT

    •  Agree. The crisis was no accident (3+ / 0-)
      Recommended by:
      grapes, DRo, trumpeter

      it was an Inside Job as the continuing litigation and reporting confirms.

      •  As important as the movie was ... (2+ / 0-)
        Recommended by:
        DSWright, AoT

        ... there is a whole new level of authenticity when the story is based on discovery, sworn testimony and "documents in evidence".

        I keep thinking back to the memos that came out during the Enron scandal about the crooked games that were being played with California power supply. You could never have sold that as a story, it would have seemed too absurd.

        This may not get immediate (or even eventual) press play, but it will be great if it can be brought out in the sunlight for posterity.

        Maturity: Doing what you know is right - even though you were told to do it

        by grapes on Thu Oct 25, 2012 at 12:49:50 PM PDT

        [ Parent ]

        •  There is a connection from media to congress (0+ / 0-)

          to litigation.

          But yes now the court cases will reveal much more for continued study by historians perhaps even future regulators.

          Though I think there is/was a contemporary narrative battle with the establishment trying to convince everyone 2008 was first "an accident that happens sometimes" and collective guilt "people took out loans, it's all of our faults"

          vs.

          A more accurate narrative driven by Occupy and others "No, people broke the law and we need to make changes so they can't jeopardize our future again."

          I don't think these cases get made without films like Inside Job, Senators like Levin and Occupiers.

          Obviously that's difficult to prove.

    •  If the government settles this they (0+ / 0-)

      are either stupid or they aren't serious about punishing banks.  This is a civil case, put this in front of a jury and BofA loses, and probably loses big.

      The revolution will not be televised. But it will be blogged, a lot. Probably more so than is necessary.

      by AoT on Thu Oct 25, 2012 at 01:12:35 PM PDT

      [ Parent ]

  •  This is good (3+ / 0-)
    Recommended by:
    AoT, DRo, Maverick80229

    One of the howls on the Left has been that Obama hasn't done anything to prosecute the Banksters.
    And not that this is the first prosecution, but it's the biggest to date.

    •  It is good (1+ / 0-)
      Recommended by:
      Maverick80229

      but it's not a prosecution, it's a civil suit.

      One would hope that discovery would reveal some information that leads to prosecution.  I can't imagine fraud would be that hard to convict on.

      The revolution will not be televised. But it will be blogged, a lot. Probably more so than is necessary.

      by AoT on Thu Oct 25, 2012 at 01:14:23 PM PDT

      [ Parent ]

  •  This will be interesting to see how this plays out (3+ / 0-)
    Recommended by:
    DSWright, Maverick80229, trumpeter

    B of A and a few other banks deserve to have this done to them for sure. They played a critical role in the financial collapse of 2008. Lets see if this brings them down though. I know Matt Taibi is happy.

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