US wants $919m penalty for fraud
Bank of America should pay the maximum penalty of $US863 million ($919 million) for selling defective loans to Fannie Mae and Freddie Mac, given the egregiousness of the fraud, US prosecutors have told a federal judge.
Bank of America should pay the maximum penalty of $US863 million ($919 million) for selling defective loans to Fannie Mae and Freddie Mac, given the egregiousness of the fraud, US prosecutors have told a federal judge.
Bank of America's Countrywide unit was found liable by a jury in Manhattan federal court last month for selling the government-sponsored entities thousands of defective loans in the first mortgage fraud case brought by the US to go to trial.
The bank's fraud was "simple but brazen", prosecutors wrote in a court filing on Saturday.
"They made bad loans and they knowingly sold those bad loans as good loans to cheat Fannie Mae and Freddie Mac out of money."
Given the measure of Countrywide's culpability, the public injury and the bank's ability to pay, the government said the maximum penalty under the law was warranted - the gross loss suffered by the entities under the scheme.
US district judge Jed Rakoff, who presided over the trial, told lawyers last month he would determine the amount of any penalty at a later date. Arguments in the matter are scheduled for December 5.
The filing represents an increase over what the government said the gross losses were last month. At the time, assistant US attorney Pierre Armand asked Judge Rakoff to impose a penalty of $US848 million. Mr Armand also offered a more lenient option, telling Judge Rakoff he could fine Countrywide about $US131 million, the estimated net losses to the two entities.
The jury also found former Countrywide Financial executive Rebecca Mairone liable for defrauding the US. Ms Mairone was the only individual named as a defendant in the government's lawsuit. In its November 8 filing, the government asked the court to impose a penalty on her commensurate with her ability to pay.
Marc Mukasey, a lawyer for Ms Mairone, had said that his client would appeal.
Countrywide was once the biggest US residential home lender, originating or buying about $US1.4 trillion in mortgages from 2005 to 2007. The bulk of them were sold to investors as mortgage-backed securities. Bank of America acquired Countrywide in 2008.
Prosecutors alleged that a division of Countrywide in August 2007 initiated a loan program called "High Speed Swim Lane", or HSSL, that ran until 2008.
Countrywide earned at least $US165 million using HSSL, allowing the company to maintain revenue in a "cratering" market for subprime mortgages, prosecutors told the jury in closing arguments. Government-sponsored enterprises such as Fannie Mae and Freddie Mac bought single-family mortgages from lenders.
Bank of America's Countrywide unit was found liable by a jury in Manhattan federal court last month for selling the government-sponsored entities thousands of defective loans in the first mortgage fraud case brought by the US to go to trial.
The bank's fraud was "simple but brazen", prosecutors wrote in a court filing on Saturday.
"They made bad loans and they knowingly sold those bad loans as good loans to cheat Fannie Mae and Freddie Mac out of money."
Given the measure of Countrywide's culpability, the public injury and the bank's ability to pay, the government said the maximum penalty under the law was warranted - the gross loss suffered by the entities under the scheme.
US district judge Jed Rakoff, who presided over the trial, told lawyers last month he would determine the amount of any penalty at a later date. Arguments in the matter are scheduled for December 5.
The filing represents an increase over what the government said the gross losses were last month. At the time, assistant US attorney Pierre Armand asked Judge Rakoff to impose a penalty of $US848 million. Mr Armand also offered a more lenient option, telling Judge Rakoff he could fine Countrywide about $US131 million, the estimated net losses to the two entities.
The jury also found former Countrywide Financial executive Rebecca Mairone liable for defrauding the US. Ms Mairone was the only individual named as a defendant in the government's lawsuit. In its November 8 filing, the government asked the court to impose a penalty on her commensurate with her ability to pay.
Marc Mukasey, a lawyer for Ms Mairone, had said that his client would appeal.
Countrywide was once the biggest US residential home lender, originating or buying about $US1.4 trillion in mortgages from 2005 to 2007. The bulk of them were sold to investors as mortgage-backed securities. Bank of America acquired Countrywide in 2008.
Prosecutors alleged that a division of Countrywide in August 2007 initiated a loan program called "High Speed Swim Lane", or HSSL, that ran until 2008.
Countrywide earned at least $US165 million using HSSL, allowing the company to maintain revenue in a "cratering" market for subprime mortgages, prosecutors told the jury in closing arguments. Government-sponsored enterprises such as Fannie Mae and Freddie Mac bought single-family mortgages from lenders.
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