Home > Uncategorized > FIRE! (FIRREA) – U.S. Government Holds BoA Liable for Fraud Under “Seldom Used” Law

FIRE! (FIRREA) – U.S. Government Holds BoA Liable for Fraud Under “Seldom Used” Law

A federal jury on found Bank of America liable under FIRREA for a fraud the government said its Countrywide unit orchestrated, originating shoddy home loans in a process called “Hustle” that were then sold to Fannie Mae and Freddie Mac.

The  story is reported in Reuters: http://www.insurancejournal.com/news/national/2013/10/29/309529.htm

 

 the Financial Institution Reform, Recovery and Enforcement Act “FIRREA” was enacted during the savings and loan insolvency crisis to enable the FDIC and the Resolution Trust Company (RTC) to efficiently and expeditiously wind up the affairs of hundreds of failed financial institutions. See Freeman v. FDIC, 56 F.3d 1394, 1398 (D.C.Cir.1995).
The story  notes that FIRREA had been used before by the Dept of Justice -but this was the first time it was taken to a jury trial.
Wednesday’s verdict, which faulted the bank for making bad home loans and passing them to Fannie Mae and Freddie Mac, was the first test of FIRREA that went all the way through trial. The use of the law could transform the Justice Department’s relationship with Wall Street.”
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