Bank Of America's Attempt To Get Out Of 99th Billion Dollar Fine Probably Unsuccessful

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Over the last several years, Bank of America has paid something like $827 billion in fines and settlements, including $16.65 billion just last month. So while another billion here or there would represent but a drop in the bucket, you can sort of understand why Moynihan et al would be done, emotionally, cutting these checks and why they would try and get out of whatever penalties they can, however thin the arguments for doing so ("Just put us out of our misery already") may be. Unfortunately, today is apparently not Moynihan's day and tomorrow's not looking very good either.

The U.S. government said Bank of America Corp's bid to throw out a jury verdict finding it liable for the sale of questionable loans to Fannie Mae and Freddie Mac before the financial crisis, which led to a $1.27 billion penalty, defies common sense and should be rejected. In a court filing on Thursday night, the U.S. Department of Justice said evidence at trial showed the bank's Countrywide unit lied to the government-controlled mortgage companies about the quality of loans being sold, as Countrywide emphasized speed and volume at the expense of quality. It also accused Rebecca Mairone, a former Countrywide official trying to reverse a liability verdict against her, of trying to obscure evidence that showed she knew the loans were suspect, but sold them anyway.

U.S. District Judge Jed Rakoff in Manhattan imposed a $1.27 billion civil penalty against the second-largest U.S. bank in July, nine months after the jury verdict. He also ordered Mairone, the only individual charged, to pay $1 million. Arguments by the defendants "defy the evidence, the law, and common sense," the government said. "Evidence of defendants' fraud was abundant." The lawsuit centered on Countrywide's "High Speed Swim Lane" program, also called HSSL or Hustle, which scrapped procedures to weed out bad loans and rewarded staff based on volume. It was created before Bank of America bought Countrywide in July 2008. The payout by Bank of America is not covered by the Charlotte, North Carolina-based lender's $16.65 billion mortgage settlement last month with federal and state authorities.

U.S.: BofA bid to void $1.27 billion fraud verdict defies common sense [Reuters]

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