The Oddest Revelation From the Bank of America Fraud Suit
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The Oddest Revelation From the Bank of America Fraud Suit
By Jonathon Weil
There is something very weird about the civil complaint the Justice Department filed this week against Bank of America Corp. (BAC) for allegedly defrauding Fannie Mae and Freddie Mac.
Prosecutors are suing under a statute called the False Claims Act, which imposes liability on those who defraud the federal government. Curiously, the suit is seeking damages for acts that Countrywide Financial Corp. committed before Fannie and Freddie were seized by the government — back when U.S. officials were adamant that Fannie and Freddie didn’t have any implicit government guarantee. (Bank of America bought Countrywide in July 2008.)
Perhaps the Justice Department has a sound case on the merits anyway; the lawsuit alleges violations of a different federal law as well. Still, I can’t help but wonder if this is how the False Claims Act was intended to be used.
