U.S. accuses Bank of America of mortgage-backed securities fraud

The U.S. government on Tuesday filed two civil lawsuits against Bank of America that accuse the bank of investor fraud in its sale of $850 million of residential mortgage-backed securities.

The lawsuits are the latest legal headache for the second-largest U.S. bank, which has already agreed to pay in excess of $45 billion to settle disputes stemming from the 2008 financial crisis.

While most of the cases Bank of America has already confronted pertain to its acquisitions of brokerage Merrill Lynch and home lender Countrywide, the lawsuits filed on Tuesday pertain to mortgages the government said were originated, securitized and sold by Bank of America's legacy businesses.

The residential mortgage-backed securities at issue, known as RMBS, were of a higher credit quality than subprime mortgage bonds and date to about January 2008, the government said, months after many Wall Street banks first reported billions of dollars in write-downs on their holdings of subprime mortgage securities. Read more >>

Global Corporations Sue Governments in Secret Courts -- Guess Who Usually Wins

In a world turned upside down, when governments forbid companies from dumping toxic waste or warn their citizens of the dangers of tobacco, large multinational corporations sue them in secret courts, where unelected judges, acting without juries, usually force the governments to cease their efforts and pay large fines to the corporations. It sounds like the voiceover for the trailer of a dystopian science fiction movie. But this is not fiction, science or otherwise; this is the reality of International Law in the early 21st century.

According to a recent report released by the United Nations Conference on Trade and Development (UNCTAD), at the end of 2011 there were at least 450 active lawsuits brought against governments by companies invoking clauses in bilateral investment treaties (BITs). These are only the known cases; most are kept secret. BITs are treaties that establish the conditions for investment by companies of one country in another nation, and were often forced upon small countries by large countries at the behest of corporations seeking to avoid regulations wherever they do business.

Although BITs have been around for years, it was only after the turn of the century that corporations started ramping up their use of them to frustrate regulations they don’t like. In 1999, the total number of known BIT suits exceeded 100 for the first time, and has steadily increased since, usually to the detriment of the nations being sued. Last year, for example, Ecuador was forced to pay fines of $78 million to U.S. oil company Chevron, which claimed the country’s efforts to protect the Amazon from pollution have negatively affected business. More...