Bank of America guilty of defrauding government

Bank of America’s Countrywide Financial unit has been found liable for defrauding two US government-backed mortgage companies by a federal jury. http://www.bbc.co.uk/news/business-24649063
Countrywide, which was acquired by Bank of America in 2008, was accused of selling thousands of defective loans to Fannie Mae and Freddie Mac.
The Justice Department is seeking as much as $848m (£523m) in penalties.
The wrongdoing, which mostly took place before Countrywide was acquired, was discovered after a whistleblower filed a lawsuit against the firm.
The US economy witnessed a big boom in its housing market in the lead up to the 2007-08 global financial crisis.
As house prices continued to rise, many banks looked to cash in on the boom by creating complex financial products that grouped together home loans.
However, a collapse in the housing market saw the value of those investments plummet as the underlying mortgage holders became unable to repay their debts.
This snowballed into something called the subprime crisis, which hurt investors globally and caused billions of dollars in losses

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