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Bank of America Liable for Countrywide Mortgages Fraud

Discussion in 'BBS Hangout: Debate & Discussion' started by rocketsjudoka, Oct 23, 2013.

  1. rocketsjudoka

    rocketsjudoka Contributing Member
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    Some justice from the mortgage crisis.

    http://money.msn.com/investing/news.aspx?feed=OBR&date=20131023&id=17029462

    Bank of America liable for Countrywide mortgages fraud

    NEW YORK (Reuters) - Bank of America Corp was found liable for fraud on Wednesday on claims related to defective mortgages sold by its Countrywide unit, a major win for the U.S. government in one of the few big trials stemming from the financial crisis.

    Following a four-week trial, a federal jury in Manhattan found the Charlotte, North Carolina bank liable on one civil fraud charge. Countrywide originated shoddy home loans in a process called "Hustle" and sold them to government mortgage giants Fannie Mae and Freddie Mac, the government said.

    The four men and six women on the jury also found former Countrywide executive, Rebecca Mairone, liable on the one fraud charge facing her.

    A decision on how much to penalize the bank would be left to U.S. District Judge Jed Rakoff. The U.S. Department of Justice has said it would ask Rakoff to award up to $848.2 million, the gross loss it said Fannie and Freddie suffered on the loans.

    Bank of America bought Countrywide in July 2008. Two months later, the government took over Fannie and Freddie.

    "The jury's decision concerned a single Countrywide program that lasted several months and ended before Bank of America's acquisition of the company," Bank of America spokesman Lawrence Grayson said. "We will evaluate our options for appeal."

    Wednesday's verdict marked a major victory for the Justice Department, which has come under criticism for failing to hold banks and executives accountable for their roles in the events leading up to the financial crisis.

    In late afternoon trading, Bank of America shares were down 27 cents at $14.25 on the New York Stock Exchange.

    WHISTLEBLOWER

    The lawsuit stemmed from a whistleblower case originally brought by Edward O'Donnell, a former Countrywide executive who stands to earn up to $1.6 million if the government prevailed.

    It centered on a program called the "High Speed Swim Lane" - also called "HSSL" or "Hustle" - that government lawyers said Countrywide started in 2007 as it sought to move away from subprime lending and issue prime loans.

    Prime loans are considered less risky than subprime. But the Justice Department said fraud and other defects were rampant in HSSL loans, because Countrywide eliminated loan quality checkpoints and paid employees based on loan volume and speed.

    The Justice Department said the process was overseen by Mairone, a former chief operating officer of Countrywide's Full Spectrum Lending division.

    Mairone later became a managing director at JPMorgan Chase & Co. That bank had no immediate comment.

    In 2012, the Justice Department intervened in O'Donnell's lawsuit and filed its own complaint under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. That law, passed in the wake of the 1900s savings-and-loan scandals, covers fraud affecting federally insured financial institutions.

    The case is U.S. ex rel. O'Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422.
     
  2. rocketsjudoka

    rocketsjudoka Contributing Member
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    I don't usually pimp my own thread but given how widespread anger at the big banks is that there would be more commentary on this issue.
     
  3. Dairy Ashford

    Dairy Ashford Member

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    Five years later, most of us still have jobs; and fully functioning mortgages, checking and credit accounts with these institutions.
     
  4. CometsWin

    CometsWin Breaker Breaker One Nine

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    I am curious where the Fannie Mae posse is right now. JP Morgan is also paying a gigantic fine. They probably made a profit on their shenanigans anyway, even with the fines.
     
  5. rocketsjudoka

    rocketsjudoka Contributing Member
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    True and I have those things. That said though there still continues to be a lot of outrage regarding the Wall Street Fat Cats from both the left and the right yet when action is taken there is hardly a peep.
     
  6. otis thorpe

    otis thorpe Member

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    the most amazing thing that comes out of these stories is how much money these banks agree to pay in fines.

    chase just agreed to pay Freddie/Fannie $6BB
     
  7. Mathloom

    Mathloom Shameless Optimist
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    People have learned to just bend over and take it while working towards a cushion before the next crisis, which should be any year now.
     
  8. otis thorpe

    otis thorpe Member

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    these issues are beyond ALOT of people's understandings and that is understandable.
     
  9. Mathloom

    Mathloom Shameless Optimist
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    It is understandable that most people don't know the intricate details of economic crisis, but it is not understandable that their elected representatives play to that ignorance rather than do what they're supposed to do - which is to use their superior knowledge and power to protect the people who elected them.

    Unfortunately those people are busy fighting their tug of war with the barely different other party, so citizens have to fend for themselves by creating a financial cushion prior to the next inevitable financial brain fart.

    What on earth are American citizens able to do about this when they have lives and dreams and families to support? No family woman/man is realistically able to take dramatic action against the mess in washington because there are people who are relying on even that measly salary. The only people who can take such dramatic action are those who have nothing, and those people are very strategically and expensively demonized publicly so that the public does not place any credibility in their causes.

    But unlike most Americans, I have faith in Americans to untangle themselves from this mess. Unfortunately, it looks like it will take a lot more walletache for them to get anywhere. The bosses upstairs know how to give most people just enough to not want to risk a big change. Just enough hatred of each other, to be distracted from common problems. No on ever said it would be easy for Americans to manage the richest, most powerful, most technologically advanced entity in human history. But if anyone can do it, they can.
     

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