For those of you who are researching about the whole Countrywide selling fraud/bad loans to the government. Here's a link that tells 80-90% of what happened:
Even if Bank of America ultimately gets through the mortgage mess, the episode has damaged its relationships with big investors, including federal agencies, which bought the bulk of those mortgages.
A group of investors — including the Federal Reserve Bank of New York, the government-owned Fannie Mae and Freddie Mac housing finance firms, pension funds, and the big investment firms Pimco and BlackRock — sent a letter threatening to force the bank to repurchase the mortgage packages by late December. The group accuses Bank of America of renegotiating mortgages owned by investors, while avoiding a hit on the home equity or credit card debt owed directly to the bank.
Moynihan said the letter "was a surprise to me, and I think it was a surprise to a lot of people, quite frankly."
Many Bank of America executives blame the economic slump for aggravating Countrywide's problems, but the bank gets little sympathy from the public or lawmakers.
"Over the course of the crisis, we as an industry caused a lot of damage," Moynihan acknowledged in January testimony before the Financial Crisis Inquiry Commission. "And it has been clear how poor business judgments we have made have affected Main Street."
IMO the loan experts do have the responsibility to give warnings on the amount of risk involved. But at the same time these investors signing up should be held accountable and equally responsible. I guess the argument here is, whether or not countrywide "lied" about these type of loans. I find it very interesting how these are all brought up AFTER the bubble burst. With the damage being done, all we're getting is blames/pointing fingers IMO.
We do not know how much BAC will be fined for this civil law suit yet. The fine should be fairly low from my prediction, however BAC and other banks are more worried that this is the opening door for future civil law suits. BAC is just trying their best to clean up the mortgage mess from Countrywide and turn things around. But in the end, they will protect themselves at the same time. IMO if this puts the big bank at risk in its day to day business---enough will be enough. Believe it or not, lagging our largest banks is no difference than lagging the recovery of the real estates/housing market and our entire economy. Regulators going after banks for large payments over loan issues are pushing banks to be skeptical in future loaning. Thus JPM's settlement of 13 billion is hoping to put a stop to "future" law suits.
Lawrence Grayson, a spokesman for BAC, said in an e-mail statement to Bloomsberg. "BAC will evaluate their options for appeal after today's decision."
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