From Washington's Blog:
Bank of America is down 17% today after AIG sued the bank for "massive fraud" in connection with mortgage debt, seeking $10 billion dollars.
As Reuters notes:
AIG accused Bank of America and its Countrywide and Merrill Lynch units of misrepresenting the quality of mortgage-backed securities, including more than $28 billion it bought, and lying to credit rating agencies about the underlying loans.
According to its complaint, AIG examined 262,322 mortgages that backed 349 offerings it bought between 2005 and 2007. It said the quality of 40.2 percent of the mortgages was significantly inferior to what had been represented.
"Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, who had no alternative but to rely on the lies and omissions made," said the complaint, filed on Monday in the New York State Supreme Court in Manhattan.
Credit-default swaps on Bank of America Corp., the nation's biggest bank by assets, soared to...
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