In startling news, a bank is set to go to honest-to-goodness trial to answer for its malfeasance leading up to the financial crisis. Much to the probable elation of Sen. Elizabeth Warren, the Federal District of New York denied Bank of America's Motion for Summary Judgment (not their Motion to Dismiss, as has been inaccurately reported elsewhere) and has set the tentative trial date for September 23.
The issue at bar is this:
Countrywide Financial Corporation sold a huge number of bad loans to Fannie Mae and Freddie Mac, secondary mortgage buyers/sellers which were taken over by the government in 2008. This bad sale cost the taxpayers more than $1,000,000,000 in losses-- a small amount by financial crisis standards. Countrywide in turn was bought by Bank of America Corporation in 2008 as part of the merger-and-acquisition frenzy that followed the meltdown. This purchase transferred to Bank of America all of Countrywide's assets and liabilities-- including its legal liability in a lawsuit for illegal actions in the past. In other words, when Bank of America bought Countrywide it also bought the potential that it could get sued for anything Countrywide could have been sued for up to that date.
So to recap: the federal government is suing a corporation for wrongdoings it bought the right to from another corporation on behalf of a pair of federally-created corporations which the government itself acquired the right to sue from. Bank of America has $2,200,000,000,000 in assets and received $20,000,000,000 in federal bailout money in 2008. This lawsuit is for 5% of the latter and one-twentieth of one percent of the former. The defendants have 34 attorneys on the case; the federal government has 8. And remember, it is considered a victory that this is going to trial at all. This is what democracy looks like now.
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