Bank of America does not have to pay a $1.3 billion penalty assessed years ago, an appeals court ruled Monday.
A jury found the megabank guilty of fraud in 2013, after Department of Justice (DOJ) officials decided not to settle a case involving a program run by its subsidiary Countrywide.
Countrywide employees created a program known as “Hustle,” a bastardization of an acronym for “High-Speed Swim Lane,” and used it to knowingly sell substandard loans to Fannie Mae and Freddie Mac. Staffers packaged up low-quality mortgage securities and sold them to government-backed housing finance companies that later had to be bailed out by taxpayers.
After the jury’s verdict in 2013, a federal judge decided the bank would have to pay $1.27 billion — more than prosecutors had reportedly sought — to make the government whole and to dissuade it from cheating taxpayers again.
The bank immediately appealed, leading to Monday’s ruling voiding the penalty. Bank lawyers persuaded a three-judge appeals panel that Hustle amounted to mere breach of contract rather than outright fraud.
The blog's full story is here.