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Judge endorses use of fraud law against Bank of America
Source: Reuters
Judge endorses use of fraud law against Bank of America
By Nate Raymond
NEW YORK | Mon Aug 19, 2013 6:14pm EDT
(Reuters) - A federal judge has endorsed a broad interpretation of a savings-and-loan era law that the Justice Department is trying to use in cases against Wall Street banks.
U.S. District Judge Jed Rakoff in Manhattan said Monday that a "straightforward application of the plain words" of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA) allowed the interpretation sought by the government.
The law has a low burden of proof, strong subpoena power and a 10-year statute of limitations, twice as long as the typical limit for fraud cases. Rarely asserted until recently, it has become the basis of three lawsuits by lawyers under Manhattan U.S. Attorney Preet Bharara against banks including Bank of America Corp, Wells Fargo & Co and Bank of New York Mellon Corp.
The latest decision came in a case the Justice Department brought last October against Bank of America over toxic mortgages that its Countrywide Financial mortgage unit sold to Fannie Mae and Freddie Mac in the financial crisis.
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By Nate Raymond
NEW YORK | Mon Aug 19, 2013 6:14pm EDT
(Reuters) - A federal judge has endorsed a broad interpretation of a savings-and-loan era law that the Justice Department is trying to use in cases against Wall Street banks.
U.S. District Judge Jed Rakoff in Manhattan said Monday that a "straightforward application of the plain words" of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA) allowed the interpretation sought by the government.
The law has a low burden of proof, strong subpoena power and a 10-year statute of limitations, twice as long as the typical limit for fraud cases. Rarely asserted until recently, it has become the basis of three lawsuits by lawyers under Manhattan U.S. Attorney Preet Bharara against banks including Bank of America Corp, Wells Fargo & Co and Bank of New York Mellon Corp.
The latest decision came in a case the Justice Department brought last October against Bank of America over toxic mortgages that its Countrywide Financial mortgage unit sold to Fannie Mae and Freddie Mac in the financial crisis.
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Read more: http://www.reuters.com/article/2013/08/19/us-bankofamerica-fraud-idUSBRE97I0ZX20130819
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