Bank of American Under Fire for Mortgage Crisis

Bank of America is in trouble again for its mortgage practices during the financial crisis. Yesterday, federal prosecutors in New York accused the company of selling defective mortgages to Fannie Mae and Freddie Mac, the two home-mortgage finance companies controlled by the government.
Prosecutors are looking to collect $3 billion in penalties from Bank of America. The civil suit is the latest in a number of cases brought against major U.S. banks by the Justice Department. Ben Protess, business reporter for The New York Times, tells us more.
“These are losses sustained by Fannie and Freddie over the last four years,” Protess says. In other words, after the financial crisis began in 2008.
The program, called a “hustle,” was started by Countrywide in 2007 to cut costs. Bank of America bought Countrywide in 2008, and then continued the program for another year – with American tax payers footing the bill.
The problem for Bank of America, is that they inherited a number of bad programs – and bad loans – through some “very dubious acquisitions” during the crisis. “I think they have a lot of buyer’s remorse,” Protess says, referencing Merill Lynch as well as Countrywide.
Since this is a civil action suit, no one will be going to prison as a result. “That’s kind of the lingering issue here,” Protess says, “Where’s the big financial executive to be punished and put in jail for the financial crisis? So far, we still don’t have that.”