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U.S. govt sues Bank of America. Again.
The US government has filed a civil mortgage fraud case against Bank of America and its predecessors Countrywide Financial and Countrywide Home Loans, accusing all three of knowingly selling bad mortgages to government-controlled mortgage financers Fannie Mae and Freddie Mac.
The government is seeking damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
BofA acquired Countrywide in 2008. Both are accused of engaging in a loan origination process dubbed "Hustle" from 2007 to 2009.
With this fraud, Countrywide gained massive profits by not verifying income, and by fast-tracking loans for quick sale on the secondary market, concealing all defects. When BofA acquired Countrywide, it copied and continued Countrywide’s fraudulent practices. This resulted in the default of thousands of residential mortgage loans. When bank crime finally caused the mortgage bubble to burst in 2008, both Fannie and Freddie collapsed under the pressure of millions of failing mortgages, and the government had to infuse $183 billion into them to keep them running.
Fortunately that $183 billion did NOT come from taxpayers. Instead, the government simply changed the numbers in computers to reflect a $183 billion credit. The money came from nowhere, and went nowhere. But then, money never does move anywhere at any time.
However the government and the media enjoy saying that it came from taxpayers. This sustains the illusion that the U.S. government has limited money, so that the masses grovel before bankers and politicians. It also keeps the masses addicted to whining and bickering, so that they remain defeatist, cynical, and enslaved.
Indeed, media reports differ on the actual bailout figures. Some say it was $187 billion. Some say it was $137 billion. Some say it was $200 billion.
No matter. It’s just numbers in computers. Meanwhile the housing market has collapsed, millions of people have been thrown onto the street, jobs have dried up, the depression worsens all the time, and US politicians want to worsen it by imposing austerity, in order to increase the gap between the 1% and the 99%.
Lawsuits over Countrywide's frauds and BofA's controversial acquisition of Merrill Lynch & Co. during the financial crisis have cost BofA millions of dollars. (Media reports say it is “ten of billions,” but that is silly. Big banks never pay large penalties.)
In one of the previous cases, BofA agreed to a $1-billion settlement of a lawsuit accusing it of defrauding the government on loans insured by the Federal Housing Administration.
Translation: BofA was sued for $1 billion, and paid a small (undisclosed) sum to make the case disappear. These are always civil cases. Never criminal.
And the band played on…