"AIG files lawsuit seeking $10b from Bank of America; Cites losses due to bad mortgages" August 09, 2011|By Peter Svensson, Associated Press
NEW YORK - More trouble piled up for Bank of America Corp. yesterday as American International Group sued it for more than $10 billion, saying the bank cheated it by selling residential mortgage-backed securities that were overvalued.
The suit comes on top of similar suits, which together put the bank in a precarious position, analysts say.
AIG said Bank of America and two companies that were later gobbled up by the bank, Countrywide and Merrill Lynch, sold the insurance company $28 billion in securities backed by home mortgages between 2005 and 2007, at the height of the housing boom. It said it looked at more than 260,000 of the underlying mortgages, and found that the bank’s “stated metrics’’ for 40 percent of the securities were false.
In one case, a borrower said she had been the owner of a construction business for 25 years, which would have made her 10 years old when she took ownership, AIG said.
Bank of America denied the allegations, saying AIG was big enough and sophisticated enough to know the risks.
Not really a denial, is it?
“AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets. It is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors,’’ Bank of America spokesman Lawrence Grayson said.
AIG spokesman Mark Herr shot back: “It is disappointing but unsurprising that Bank of America continues to attempt to blame others for its own misconduct. Investors, no matter how sophisticated, were entitled to rely on its numerous written representations about the securities it sold.’’
In June, Bank of America agreed to pay $8.5 billion to a group of investors for selling them poor-quality mortgage securities.
Related: Bank of AmeriKa Buys Back Fraudulent Mortgage-Backed Securities
AIG’s suit is separate, but the company is raising questions about whether the settlement went far enough. On Friday, New York Attorney General Eric Schneiderman urged the judge to reject the settlement, calling it unfair.
Related: Coakley Caves
Bank of America wrote a number of bad mortgages, but it is in worse shape than other major banks like JPMorgan Chase & Co. and Wells Fargo & Co. because of its purchase of Countrywide for $4 billion in 2008.
Yeah, poor, billions-per-quarter in profits BoA.
What seemed like a bargain price for the country’s largest mortgage lender has cost the bank tens of billions more in mortgage losses, regulatory fines, repurchases of poorly written loans and expensive litigation....
That last bit means they had to buyback all that crap; that is what your "bailout" was for, American.
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It was an Inside Job, readers -- and now Wall Street is looking to to "revive the market for mortgage securities?"
"Bank of America stock at lowest since ’09" by Binyamin Appelbaum and Nelson D. Schwartz | New York Times, December 20, 2011
NEW YORK - More than anything else, Bank of America’s problems stem from its 2008 acquisition of Countrywide Financial, the subprime mortgage giant whose excesses came to symbolize the housing bubble. It now faces lawsuits from investors seeking to force it to buy back billions in soured mortgages.
In addition, slow economic growth and ultra-low interest rates are eating into profit margins.
Related:
"Bank of America Corp posted better-than-expected first-quarter earnings on Thursday in the latest sign that the No. 2 U.S. bank is moving past the mortgage troubles that have hobbled it since the financial crisis. Bank of America's first-quarter net income was $653 million."
Oh, poor BoA, they didn't break a billion for the quarter.
Also see: Bank of America faces $2b tied to bad home-equity loans
Didn't stop them from awarding the CEO $7 million dollars.
What’s more, capital markets where banks help companies raise money and make deals have slowed in recent weeks, hurting results at Bank of America’s investment banking unit.
Even a $5 billion investment by Warren E. Buffett this summer has failed to mollify sellers - he has lost roughly $1.5 billion on paper, although the generous terms of his purchase agreement protect him against losses.
Related: Breakfast Buffett
Smells like s***.
Institutional money managers are also quietly dumping their losers before 2012 arrives, a practice known as “window dressing,’’ which removes stocks like Bank of America when investors read year-end reports.
Someone put a brick through that bank window.
Lies are like glass, ever notice that? Once they have been shattered....
Banks also face worries about new rules requiring them to set aside more capital that could lower future profits.
PFFFFFFFFFTT!!
Rules AIN'T EVEN BEEN WRITTEN YET!!!
For financials, “the higher capital requirements mean they have less money to make money with,’’ said Brad Sorensen, an analyst for the Schwab Center for Financial Research....
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And the Merrill Lynch deal?
"New questions raised about bank’s buy of Merrill Lynch" June 04, 2012
NEW YORK — Days before Bank of America shareholders approved the bank’s $50 billion purchase of Merrill Lynch in December 2008, top bank executives were advised that losses at the investment firm would most likely hammer the combined companies’ earnings in the years to come.
They seem to be doing okay, unless $653 million for three months "work" is chump change.
But shareholders were not told about the looming losses, which would prompt a second taxpayer bailout of $20 billion, leaving them instead to rely on rosier projections from the bank that the deal would make money relatively soon after it was completed.
And if they LIED TO SHAREHOLDERS what makes you think they would think for a second about lying to you?
What Bank of America’s top executives, including its chief executive, Kenneth D. Lewis, knew about Merrill’s vast mortgage losses and when they knew it emerged in court documents filed Sunday evening in a shareholder lawsuit being heard in US District Court in Manhattan.
Related: Executive Payday: Coming and Going at Bank of AmeriKa
The disclosure, coming to light in private litigation, is likely to reignite concerns that federal regulators and prosecutors have not worked hard enough to hold key executives accountable for their actions during the financial crisis....
I don't see anyone siting in a jail cell.
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Also see: Big Banks Are Booming
