“Bank Of America Reaches Record Settlement Over Mortgage Meltdown,” NPR reports. (Link safe, goes to the Brothers Judd blog):
The settlement “addresses allegations that Bank of America, Merrill Lynch, and Countrywide each engaged in pervasive schemes to defraud financial institutions and other investors in structured financial products known as residential mortgage-backed securities, or RMBS,” U.S. Attorney General Eric Holder said.
The securities typically included a high percentage of subprime mortgages and the sellers misrepresented to investors the degree of risk involved, Justice alleges. When the housing market collapsed, many of the RMBS became worthless.
Holder said the subprime mortgages bundled into the securities “contained material underwriting defects; they were secured by properties with inflated appraisals; they failed to comply with federal, state, and local laws; and they were insufficiently collateralized.”
Even so, he said, “these financial institutions knowingly, routinely, falsely, and fraudulently marked and sold these loans as sound and reliable investments. Worse still, on multiple occasions — when confronted with concerns about their reckless practices — bankers at these institutions continued to mislead investors about their own standards and to securitize loans with fundamental credit, compliance, and legal defects.”
As one of the Brothers Judd’s commenters notes:
Holder’s statement is ahistorical. BofA bought Countrywide (who no doubt did defraud) and Merrill (much less clear on fraud) at the virtual demand of the US Government.
Perhaps Eric should have asked his pals Jamie Gorelick. Franklin Raines, Jim Johnson, Rahm Emanuel, and Andrew Cuomo about mortgage standards and fraud. Or he could have checked with Barney Frank, Chris Dodd, and Maxine Waters.
Exactly. Who pushed banks to the high-risk low-income housing market in the first place? But hey, government is just another word for the things we do together to wreck economies: