Countrywide's Legacy Continues to Haunt BofA
And the hits just keep on coming for Bank of America. In what is possibly one of the worst years to work for one of the too-big-to-fail banks, 2013 is shaping up to end on a low note for the ever-criticized BofA. Yesterday, the bank was found liable for selling defective mortgages, which many are saying is striking a huge blow for the government in taking on the big banks and winning. Deemed guilty by a jury, BofA’s unit Countrywide Financial, saw its top manager facing the brunt of the allegations and liability for the bad mortgages. “In this case, Bank of America chose to defend Countrywide’s conduct with all its might and money, claiming there was no case here,” said U.S. Attorney Preet Bharara. “The jury disagreed. This office will never hesitate to go to trial to expose fraudulent corporate conduct and to hold companies accountable, particularly when it has caused such harm to the public.” BofA is apparently scrambling with their next steps, however; the New York Times reached out to the company and was met with a fairly standard response, courtesy of company spokesperson Lawrence Grayson: “The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company. We will evaluate our options for appeal.” The company will be liable for around $848 million in damages after loans acquired by Freddie Mac and Fannie Mae went south. Countrywide reportedly ran a scheme appropriately called “Hustle,” which resulted in the sale of rapidly deteriorating home loans to the GSEs. “In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud, as the jury unanimously found,” said Bharara in a statement. As the icing on the cake, Bank of America will also continue with its plans to lay off around 1,300 workers in its mortgage divisions. The company has already reportedly laid off around 9,000 full-time employees after making $22.6 billion, an 11 percent quarterly decrease. BofA announced that they expect to make fewer home loans in the fourth quarter and are also looking to cut even more mortgage jobs.