Bank of America asked the judge to dismiss the lawsuit, saying the securities were sold to “sophisticated” financial institutions in 2007 and 2008 – financial institutions which haven’t sued, according to a Businessweek report.
The Justice Department’s lawsuit is one of many with which the government is seeking to hold lenders accountable for actions it says helped trigger the 2008 financial meltdown. The DOJ is suing the bank under a law from the 1980s which allows the government to pursue litigation for actions taken too long ago to be covered under other laws, Businessweek reported.
Bank of America, however, holds that the law isn’t applicable in this case because it didn’t lie to the government or make false statements to banking or insurance customers.
The bank said that the government is trying to “fundamentally rewrite the securities laws by criminalizing immaterial misstatements.”
A magistrate judge recommended last month that the case be dismissed, according to Businessweek. However, the DOJ contends that the magistrate’s recommendation ignored legal standards and relied on faulty factual findings. If the U.S. District Judge decides to uphold the magistrate’s recommendation and dismiss the suit, the government will have a chance to appeal the decision, Businessweek reported.
One of the nation’s largest lenders has asked a judge to dismiss a Justice Department lawsuit accusing it of misleading investors about the quality of loans underlying $850 million in mortgage-backed securities.