Here is the text of the lawsuit. We are still cleaning up the mess from 2005-2007. That's what this is about.
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"This case arises from a massive fraud perpetrated by Defendants Bank of America, Merrill Lynch, and Countrywide that has resulted in more than $10 billion in damagesto AIG, and ultimately American taxpayers. AIG brings this action as part of its overall effortsto recoup such damages from these defendants and other parties.2.
Between 2005 and 2007, Defendants fraudulently induced AIG to invest in nearly350 residential mortgage-backed securities (“RMBS”) at a price of over $28 billion. Driven by asingle-minded desire to increase their share of the lucrative RMBS market and the considerablefees generated by it, Defendants created and marketed RMBS backed by hundreds of thousandsof defective mortgages.3.
The Offering Materials used to sell the RMBS fraudulently misrepresented andconcealed the actual credit quality of the mortgages by providing false quantitative data about theloans, thus masking the true credit risk of AIG’s investments. The Offering Materials alsofalsely claimed that the mortgages had been issued pursuant to objective underwriting guidelines.In fact, the loan originators, including Defendants, encouraged borrowers to falsify loanapplications, pressured property appraisers to inflate home values, and ignored obvious red flagsin the underwriting process.4.
The stated underwriting guidelines had been replaced by an undisclosedgoverning principle: Defendants would originate or acquire any loan that could be sold to third- party investors like AIG through RMBS securitization, no matter how risky."
http://dealbook.nytimes.com/2011/08/08/bank-of-americas-no-good-very-bad-day/
