Bank of America has
agreed to pay $8.5 billion to settle a lawsuit related to predatory
lending. The deal comes after 22 big investors demanded that the bank
repurchase $47 billion in mortgages that its Countrywide unit sold to
them in the form of bonds.
Countrywide had provided incentives
that encouraged agents to lie about adjustable rates. The
failed lender was merged with Bank of America in 2008.
In October 2008,
Bank of America settled a suit filed by the California attorney
general and other officials. It agreed to disburse $8.68 billion to
borrowers across the country who were affected by Countrywide’s
predatory lending.
The billions Bank of America has been
forced to pay out is further evidence of the massive fraud
perpetrated by mortgage lenders as they pumped up the housing bubble.
The actions of Countrywide and other banks in making predatory loans
extended and intensified the phenomenon of overproduction,
to which the capitalist system is periodically prone, inevitably
ending in crisis.
