Bank Of America's Legal Woes Go Global After Norway's Sovereign Wealth Fund Sues For Mortgage Fraud
It was only a matter of time. A few weeks after every money losing firm in the US and the kitchen sink disclosed it would sue Bank of America in an accelerating attempt to salvage something through litigation, the worst case scenario for Brian Moynhian just got real. As of minutes ago, Norway's Government Pension Fund, which is another name for its Sovereign Wealth Fund, has just announced it is suing Bank of America for mortgage fraud. Not only that but it is also going after Countrywide, obviously, but far more importantly, is also suing KPGM, the auditor on the Countrywide transaction, and, drumroll, ole' Agent Orange himself. If US bank analysts were busy quantifying the damages from every bank in the US suing BofA, just wait until the calculation is expanded to included every firm that bought mortgages from Bank of America... ever...in the entire world.
Pension Fund chief Yngve Slyngstad suing mortgage company Country-wide, the owner Bank of America and KPMG in the U.S. for fraud, newspaper Dagens Næringsliv.
Billions are at the game.
The Fund and 14 other large institutional investors meetings the parties to a court in California.
They claim that Countrywide - formerly the largest U.S. lender for residential purposes - held back important information and concealed the extent of credit risk that the company took. The company was one of the largest lending founders of so-called subprime loans, which was a major cause of financial crisis.
Because of the misrepresentation of the company and senior management, bought the oil fund and other investors in Countrywide shares at artificially high prices from March 2004 to March 2008, according to the fund.
Angelo Mozilo and two other former directors sued as well. They should have enriched himself personally by selling shares of "several hundred million dollars" based on information that was not available in the market.
The company's auditor KPMG and Bank of America, which bought the company in 2008, accused in the lawsuit.
"Countrywide's shares traded as high as $ 45 2 februar 2007. February 2007. Just over a year later was the stock down by about 90 percent, which caused investors billions of dollars in losses, "the oil fund's press spokesperson Bunny Nooryani in an email.
She would not identify the values ??at stake.
The Fund reported last year, the requirements in 50 different cases pending before courts, but rarely direct legal action themselves. It shows the Fund's annual report for 2010, according to Dagens Næringsliv.
And just like the US lawsuit spigot opened ever so slowly at first, it is now gushing, and is absolutely certain that every company (ahem insolvent German banks) that ever bought a mortgage from Countrywide, Merrill and Bank of America will serve the local branch of the bank with a summons over the next month.
All those wondering just what rainy day BofA and all other banks had been conserving their ever growing cash stash for, just got their answer.
And the funniest, or saddest depending on one's perspective, thing is: insolvent European banks, as long as they bought any toxic bonds without doing much if any homework, are about to pad their empty coffers courtesy of America's biggest bank... which in turn will lead to TARP 2, better known as the taxpayer funded bailout of European bank with a Bank of America conduit.
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