Bloomberg News

BofA Seeks Bar to Claim at Trial That It Caused World Crisis (1)

September 18, 2013

Bank of America Corp. (BAC:US) asked a court to bar prosecutors from presenting trial evidence and claims that the bank and its Countrywide unit “are responsible for causing the worldwide financial crisis in whole or in part.”

“Evidence or argument that attempts to link a particular defendant to the nation’s recent economic struggles, whether it be the government’s fiscal troubles or any of the multitude of negative effects of the mortgage crisis and recession, is unfairly prejudicial,” lawyers for Countrywide and Bank of America said in papers filed late yesterday in U.S. District Court in Manhattan.

The U.S. sued Bank of America in October, intervening in a whistle-blower action filed by a former Countrywide executive, Edward O’Donnell. The U.S. claims Bank of America and Countrywide, which it acquired in 2008, sold thousands of defective loans from 2007 to 2009 to the home-mortgage finance companies. The trial is to begin next week.

Countrywide engaged in a “host of irresponsible origination practices that prioritize funding speed and discourage scrutiny and quality into a singularly risky loan manufacturing process that pumped out large quantities of poor quality loans,” the government said in court papers.

The companies said in their filing that the global crisis “was a once-in-a-generation, multifaceted event to which a substantial number of factors contributed.”

‘Highly Misleading’

“Any allegation that one firm or set of firms ‘caused’ the financial crisis would be wrong and highly misleading,” they said.

The bank defendants also asked the court to disallow evidence about the U.S. Treasury’s decision to provide funding to Bank of America as part of the government’s Troubled Asset Relief Program, saying it would prejudice them before the jury and isn’t relevant to the civil fraud case.

“Any argument about the defendants’ supposed role in the worldwide financial crisis and its devastating effects could serve no other purpose than prejudicing the jury against the defendants’ by arousing the jurors’ frustrations with the economy or large financial institutions,” Bank of America said.

The case is U.S. v. Countrywide Financial Corp., 1:12-cv-01422, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in federal court in Manhattan at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $17.62 USD
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