Bank of America owes billions in predatory lending settlements

In brief

July 7, 2011

Bank of America has agreed to pay $8.5 billion to settle a lawsuit related to predatory lending. The deal comes after 22 big investors demanded that the bank repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.

Countrywide had provided incentives that encouraged agents to lie about adjustable rates. The failed lender was merged with Bank of America in 2008.

In October 2008, Bank of America settled a suit filed by the California attorney general and other officials. It agreed to disburse $8.68 billion to borrowers across the country who were affected by Countrywide’s predatory lending.

The billions Bank of America has been forced to pay out is further evidence of the massive fraud perpetrated by mortgage lenders as they pumped up the housing bubble. The actions of Countrywide and other banks in making predatory loans extended and intensified the phenomenon of overproduction, to which the capitalist system is periodically prone, inevitably ending in crisis.

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