Thursday, January 30, 2014

U.S. seeks larger penalty from Bank of America in 'Hustle' case

The U.S. government is increasing the penalties it is seeking from Bank of America after a jury found its Countrywide unit guilty of knowingly selling bad home loans to Fannie Mae and Freddie Mac, Bloomberg reports.

The government, which initially sought $864 million, now says the Charlotte-based bank should pay the maximum penalty of $2.1 billion in the so-called "Hustle" case.

In October, a jury in the civil case found Countrywide Financial Corp. and former executive Rebecca Mairone guilty of fraud over defective mortgages generated by the Hustle process, which the government said handled loans at a high speed and without regard for quality.

U.S. District Judge Jed Rakoff in Manhattan has yet to decide what the penalty should be in the first mortgage-fraud case brought by the U.S. to go trial, Bloomberg reports.

“To punish defendants for their culpability and bad faith, and to deter financial institutions and their executives who would engage in similar fraudulent mortgage schemes, the court should impose the maximum penalty on the bank,” the government said in the filing late Wednesday.

The bank has said it should not have to pay penalties in the case. It also has said the most it can be fined is $1.1 million under the Financial Institutions Reform, Recovery and Enforcement Act. The bank has pointed out that the Hustle process ended before it acquired Countrywide in 2008.

“This claim bears no relation to the limited Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company," bank spokesman Lawrence Grayson said Thursday. "We will present the relevant facts in a detailed response soon.”


Garth Vader said...

The Obama/Holder Injustice Department keeps its track record of ZERO CRIMINAL INDICTMENTS for financial fraud intact.

Anonymous said...

Bank of America should be fined TRIPLE the amount that was originally determined. Who does the bank think they are to tell the court what they have to pay? For that, they should be required to pay 5 times the amount imposed on them. They have the money. They caused the problem NOT the American people. We want some of the worst punishment for the banks that can be handed down. Really what we want is for PEOPLE of the bank to be charged and not the bank itself. Those PEOPLE need to go to PRISON and stay there a long, long time for the distress that they have caused millions and millions of American citizens.