Bank of America: U.S. fraud case is 'Alice in Wonderland'

Tue Oct 22, 2013 5:28pm EDT
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By Nate Raymond

NEW YORK (Reuters) - The U.S. government has failed to produce any evidence to show that Bank of America Corp's (BAC.N: Quote) Countrywide unit committed mortgage fraud in the run-up to the financial crisis, a lawyer for the bank said on Tuesday.

The remarks came at the end of a four-week trial in which the government said Countrywide lifted controls on mortgages in a process called "Hustle," and then intentionally sold the resulting bad loans to government-sponsored mortgage giants, the Federal National Mortgage Association (Fannie Mae) FNMA.OB and the Federal Home Loan Mortgage Corp. (Freddie Mac) FMCC.OB.

"We've been dragged down the rabbit hole into Alice in Wonderland," Bank of America lawyer Brendan Sullivan said.

The lawsuit is the first government case to go to trial over the faulty mortgage practices that led to the 2008 financial crisis.

It is also the first such case to go to trial asserting claims under a 1980s law called the Financial Institutions Reform, Recovery and Enforcement Act, which the government has recently begun using to bring cases against banks.

Making a closing statement for the government, Assistant U.S. Attorney Jaimie Nawaday that Countrywide put speed and volume ahead of quality, which was reflected in employees' bonuses and the elimination of underwriters who could assure loan quality.

"After four weeks of evidence and testimony, this is still a case about greed and lies," she said.

Rebecca Mairone, the former chief operating officer of Countrywide's Full Spectrum Lending division and a co-defendant with Bank of America in the case, "didn't want to hear the process wasn't working," Nawaday said.   Continued...

The logo of the Bank of America is pictured atop the Bank of America building in downtown Los Angeles November 17, 2011. REUTERS/Fred Prouser