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BofA Goes to Trial Over ‘Worst of the Worst’ 2008 Subprime Loans

  • Bond insurer Ambac claims Countrywide ran bad-loan ‘factory’
  • Defense says ‘everyone’ knew securitized loans were very risky

Bank of America Corp. is facing off in court with bond insurer Ambac Financial Group Inc. in a $2.7 billion case that’s one of its last legal hangovers from the subprime crisis.

Countrywide Financial, which Bank of America acquired amid the mortgage lender’s 2008 collapse, was the “worst of the worst” in underwriting securities backed by bad loans in the years leading up to the crisis, a lawyer for Ambac said Wednesday in opening arguments in New York state court. The insurer is seeking to recover billions of dollars it paid out on those bonds.