AIG Sues Bank of America

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(Image Source: CEOWORLD Magazine)


BY: JUSTIN WHALEY



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It's a battle of corporate giants -- with a staggering amount of money on the table.
After a two-day stock decline -- its worst since 2009 -- insurance company AIG plans to sue Bank of America over a slew of mortgage securities gone-awry-- and an estimated $10 billion dollars down the drain.

Here's the Financial News Network:

"According to AIG, Bank of America and its Merrill Lynch and Countrywide financial units misrepresented the quality of the mortgages placed in securities and sold to investors, according to three people, with knowledge of the complaint."

According to New York Magazine, the numbers from filed lawsuits are staggering --

"AIG claims that about four out of ten mortgage securities were made to look better than they were by Bank of America, leading to $28 billion in losses during the financial crisis. In lieu of Justice Department prosecutions, investors have filed some 90 lawsuits with demands totaling at least $197 billion."

Bank of America isn't AIG's only target. In hopes of recovering lost finances from the recent economic downturn, AIG is preparing similar lawsuits against at least three other financial institutions. The New York Times reports:

"The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecutions ... has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable."

But is AIG a victim -- or should they have known what they were insuring? A writer for 24/7 Wall St. says if the company got the wool pulled over their eyes -- it's their own fault.

"At the end of the day, every bank and brokerage firm that sold mortgage products has a real defense against AIG. If anyone should have known what they were buying, it should have been AIG."

The suit, alleging "massive fraud", was became public on Monday. Bank of America's President Brian Moynihan will address the lawsuit on Wednesday.



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