Bank Of America Getting Smashed, As AIG Jumps Into The Lawsuit Fray In A Big Way

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Just when you thought things couldn’t get any worse for Bank of America.

Now, insurer American International Group is expected to sue Bank of America in what might be the largest mortgage-security-related action filed by a single investor, the New York Times reports.

The suit seeks to recover more than $10 billion in losses on $28 billion in investments in mortgage-backed securities, according to the Times.

According to the report, there’s a growing trend of investors pursuing private lawsuits claiming banks misled them into purchasing risky securities.  The trend also stems from the lack of prosecutions on behalf of the Justice Department against the largest financial firms and their executives. 

Bank of America might not be the only one facing a suit from AIG.

Apparently AIG is planning to file similar suits against Goldman Sachs, JPMorgan Chase and Deutsche Bank, the newspaper said citing people with knowledge of the complaint. 

Last week, shares of the largest U.S. bank tanked on news the New York attorney general would reject its $8.5 billion mortgage settlement with BlackRock, BNY Mellon, and PIMCO.

Shares of Bank of America today are down more than 8% in premarket trading after closing down Friday more than 7.47%, or $0.66, to end at $8.17 a share.

Read the full report from the New York Times here >>

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