BofA Put Toxic Debt in Bond as Staff Resisted, U.S. Says
Bank of America Corp.’s traders fought off efforts by the firm in 2007 to include risky Alt-A mortgages in a securitization. That wasn’t enough to spare investors from being cheated, according to the U.S.
“None of these loans are suitable for a prime jumbo A-credit securitization,” one trader wrote in an e-mail, expressing discomfort with adding the low-documentation Alt-A debts to the pool. “Like a fat kid in dodgeball, these need to stay on the sidelines,” another trader wrote, according to the Justice Department’s complaint.
“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”
Oh yeah — that was Citibank — remember the FCIC “hearings” that I reported on extensively?
Who has faced sanction for the actions uncovered by the FCIC?
This was testimony given under oath.
Any prosecution of these clowns is good prosecution from where I sit, but the real question is “why now?” and “why only one of the bad actors?” Why not Countrywide executives, for example? Why not Citibank? Why not, in short, all of them?