Bank of America seeks U.S. mortgage bond lawsuits dismissal

Fri Nov 8, 2013 6:35pm EST
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By Aruna Viswanatha and Jonathan Stempel

WASHINGTON (Reuters) - Bank of America Corp asked a federal court on Friday to throw out two U.S. government lawsuits accusing the nation's second-largest bank of defrauding investors during the financial crisis.

The U.S. Justice Department and the Securities and Exchange Commission had accused the bank in lawsuits filed in August in its Charlotte, North Carolina hometown of fraud in its sale of $850 million of residential mortgage-backed securities.

Such cases are usually brought under the federal securities laws, under which authorities must prove that a defendant intended to break the law.

But the Justice Department case in particular relied on the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The government has turned increasingly to that law in pursuing cases linked to the financial crisis against banks, in part because of its 10-year statute of limitations.

In one of its filings with the Charlotte federal court on Friday, Bank of America accused the government of stretching that law beyond recognition.

"(D)espite repeatedly stating that the Bank violated the securities laws — (the Justice Department) conspicuously avoids bringing any claims under the securities laws," the bank said in its motion.

A Justice Department spokeswoman declined to comment.


A sign for a Bank of America office is pictured in Burbank, California August 19, 2011. REUTERS/Fred Prouser