Late last month, Bank of America was found guilty of fraud in connection to selling defective mortgages to which the U.S. Department of Justice recommended to the court hearing the case that the bank be fined close to $900 million. This week, Bank of America argued that no penalty should be imposed at all.
The case involved a scandal specifically with Bank of America’s Countrywide Financial group in a scam known as “Hustle,” or “High Speed Swim Lane,” or “HSSL” for short. The scam removed checks for loan quality and employee compensation was based purely on production, regardless of how shoddy the loan was.
Because Bank of America insisted a lack of proof it defrauded customers, the government argued that the bank “frequently defied both the evidence and common sense.”
To which Bank of America responded that “The government’s argument is offensive, suggesting a defendant should be more severely punished when it dares to defend itself against allegations of fraud which it truly believes were baseless — and still does. The penalties in the matter should be zero.”
The bank believes that the highest it should be fined, if at all, is $1.1 million.
The Financial Institutions Reform, Recovery, and Enforcement Act was created after the savings-and-loans scandal of the 1980s to combat fraud in big banks. This case involving Bank of America was the first to be heard under the act after lying dormant for nearly thirty years.
“Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” said US Attorney Anne M. Tompkins. “Bank of America will have to face the consequences of its actions. We have made a commitment to the American people to hold financial institutions accountable for practices that violated the law and wreaked havoc on the financial system.”
Josh is a writer and researcher with Ring of Fire. Follow him on Twitter @dnJdeli.
