Boston, MA 04/29/2014 (wallstreetpr) – Bank of America Corp (NYSE:BAC) urged a judge to discharge a lawsuit filed with the U.S. Justice Department which claims the bank to mislead investors in mortgage securities loans.
The lawsuit claims that Bank of America Corp (NYSE:BAC) has misinformed investors about the loan quality related to mortgage supported securities worth $850 million. In one of the filings with the federal court in Charlotte, North California, the bank said that it had sold the securities to two financial institutions in 2007 and 2008. The bank said that the deal had taken place before the collapse of the real estate market of the U.S.
The U.S. Government v/s The Bank
The U.S. is on the look out to punish companies whose actions trigger the financial crisis. The present case and some others depend on a savings and loan crisis law which empowers the government to judge actions taken in the past to be reconsidered by other laws. The 1980s law also allows the U.S. to seek bigger awards in damages.
In its filing yesterday, Bank of America Corp (NYSE:BAC) claimed that the law cited in the government grievance is not applicable as the bank made no false statements to any government agency or to customers belonging to insurance or banking transactions.
Recommendation For Dismissal
Last month, a magistrate judge had recommended the U.S. District Court dismissal of the case without allowing the U.S. government opportunities to manage any damages. In another filing dated April 10, the Justice Department claimed that the recommendation ignored legal proceedings for filing a lawsuit and depended on false findings. If, however, the recommendation is accepted, the U.S. could appeal the decision.
If the case is discharged, it will be the first among several such cases which target companies under the Firrea 1989 according to which the government sues institutions, groups or people for fraud, instead of charging them with a crime.
