$1 Billion BOA Lawsuit Claims Mortgage Fraud
STEVE INSKEEP, HOST:
The federal government is suing Bank of America for one billion dollars. The government is accusing the bank of carrying out a mortgage fraud scheme against government-backed mortgage companies Fannie Mae and Freddie Mac. Prosecutors say Countrywide Financial, which Bank of America later bought, deliberately sold thousands of defective loans.
As NPR's Ailsa Chang reports, the government says it was taxpayers who were left on the hook.
AILSA CHANG, BYLINE: The government has already filed several lawsuits against financial institutions for what it calls reckless or fraudulent practices in the mortgage market.
But to some legal academics, like James Cox at Duke's Law School, this Bank of America case is different.
JAMES COX: This is the lawsuit that we've been waiting for since the fall of 2008.
CHANG: The lawsuit describes a scheme at Countrywide where the goal was to sell as many mortgages as possible. Quality controls that would have weeded out bad loans were thrown out the window. And allegedly everyone was in on it, from the executives to the loan processors who got bonuses for high volume.
COX: It describes how, systematically, from the top down, at a major financial institution, that the name of the game was let's make as much money as we possibly can by stiffing the other guy.
CHANG: Cox says no other lawsuit by the government so far takes aim at a culture of greed in the same size and scope as this case does. Bank of America says it can't now be expected to compensate for losses it says were actually caused by the economic downturn.
Ailsa Chang, NPR News.
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