Big bank can't get lawsuit dismissed

by Ryan Smith28 Aug 2013

Bank of America just can’t win. A federal judge has refused to dismiss a Department of Justice lawsuit against the bank, even as BOA saw its own suit against the feds thrown out in a separate case.

In an order made public Tuesday, U.S. District Judge Jed Rakoff refused to dismiss the government’s lawsuit, which alleges that Bank of America’s sloppy business practicescost taxpayers more than $1bn. Rakoff said there were enough “genuine factual disputes” in the case to warrant its continuation, according to a Reuters report.

The DOJ contends that Bank of America’s Countrywide Financial unit sold troubled mortgages to Fannie Mae and Freddie Mac.

The sales came as a result of a 2007 Countrywide program called “High Speed Swim Lane” – also known as HSSL or “hustle.” Prosecutors allege that Countrywide sped mortgages through the approval process by removing quality controls – which resulted in thousands of fraudulent or defective mortgages being sold to Fannie and Freddie.

Meanwhile, another federal judge has thrown out Bank of America’s separate lawsuit against the Federal Deposit Insurance Corporation. The suit stemmed from more than $1.7bn in investor losses from the 2009 collapses of a regional bank and a mortgage lender.