Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

BofA Says ‘Fat Kid’ Mortgage-Bond Case Should Be Tossed

Nov. 8 (Bloomberg) -- Bank of America Corp. asked a federal court to dismiss a lawsuit brought by the U.S. that accuses the lender of misleading investors about the quality of loans backing $850 million in securities.

The government failed to meet the requirements for suing under the Financial Institutions Reform, Recovery and Enforcement Act, the bank said in a filing today in federal court in Charlotte, North Carolina. That law is being put to use by prosecutors to bring mortgage cases against lenders.

“After a three-year investigation the complaint lacks even a single factual allegation suggesting that any bank employee took any affirmative step to conceal facts” about the securities, the bank said.

The government’s complaint, filed in August, chronicles friction among bank staff in 2007 and 2008 as they excluded risky “Alt-A” loans while leaving in wholesale debts once scorned as “toxic waste” by the firm’s then-chief.

According to the complaint, an employee of the Charlotte-based lender sent an e-mail to a trader and others expressing frustration over efforts to add poor-quality mortgages to the pool backing securities at issue in the case.

Referencing the substandard mortgages, he wrote “like a fat kid in dodgeball, these need to stay on the sidelines,” according to the filing.

The case is U.S. v. Bank of America Corp., 13-cv-00446, U.S. District Court, Western District of North Carolina (Charlotte).

To contact the reporter on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.