AIG Files $10 Billion Suit Against Bank of America Over MBS Fraud
AIG has filed a $10 billion lawsuit against Bank of America over allegations of mortgage-backed securities (MBS) fraud. AIG claims that Bank of America and several of its acquisitions, including Merrill Lynch and Countrywide, of misrepresenting the quality of the mortgages that went into bundled securities, costing AIG approximately $28 billion in losses. The suit was filed the same day Bank of America lost 20.3 percent of its stock value, as concerns arose regarding Bank of America's ability to get ahead of the toxic mortgages it holds. This marked the company's lowest point on Wall Street in more than two years, as Bank of America stock has now plummeted approximately 50 percent in 2011 alone. In late June, Bank of America reached an $8.5 billion settlement with 22 investors regarding repurchase and mortgage servicing claims on 530 residential mortgage-backed securities (RMBS) issued by Countrywide for which BNY Mellon served as the trustee. ''AIG is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors,'' said Bank of America Spokesman Lawrence Grayson. "AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets."