Bank of America (Countrywide) sued by investors for fraud

The endgame of Foreclosuregate is starting. According to the Wall Street Journal, Bank of America through its purchase of Countrywide, and Countrywide’s ex-CEO Angelo Mozilo are being sued for hundreds of millions of dollars in fraud allegations:

The lawsuit was filed Monday in New York State Supreme Court by investors who bought hundreds of millions of dollars in Countrywide’s mortgage-backed securities from 2005 to 2007, before the housing market went bust. The list of a dozen plaintiffs includes New York Life Insurance and TIAA-CREF Life Insurance.

Separately, Shashien Nasiripour at the Huffington Post reports that the Congressional Financial Crisis Inquiry Commission will call for prosecution of fraudulent behavior on the part of principals on Wall Street:

According to the law that created the Financial Crisis Inquiry Commission, the panel has a responsibility to refer for prosecution any evidence of lawbreaking. The offices that have received the referrals — the Justice Department, state attorneys general, and perhaps both — must now determine whether to prosecute cases and, if so, whether to pursue criminal or civil charges.Though civil charges appear a more likely outcome should prosecution result, one source familiar with the panel’s deliberations said criminal charges should not be ruled out.

The commission’s decision to refer conduct for prosecution underscores the severity of the activities it has uncovered and plans to detail in its widely anticipated final report, the sources said.

Obviously these are part of the first moves by the investor class to take to task the predatory and fraudulent mortgage origination practices that led to the meltdown of the global financial system. This will play out over many years in the courts and in Congress

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