Most people have their own thoughts on what started the recession in 2008, but there’s a general acknowledgement that banks and mortgage lenders were responsible for a large part of it. Under-qualified home buyers were being granted mortgages that they ultimately weren’t able to pay back, causing a huge crash that crippled the economy. Many companies decided to retaliate and seek lawsuits against big banks, thinking they would have a strong case. But as AIG recently found out, the government sided with the lenders, ultimately granting a bailout and dismissing one from a great deal of liability.
In July of 2012, the Federal Reserve Bank of New York granted a bailout to Bank of America; however, this didn’t become publicly known until court filings were made late last week. The amount of the settlement is undisclosed, however AIG was seeking upwards of $7 billion in damages from Bank of America. The Fed threw its weight behind BOA and released the bank from any claims of fraud.by