A jury found Bank of America liable on Wednesday for selling defective mortgages and found a manager at the bank's Countrywide Financial unit specifically to blame for many of the practices. Prosecutors said that Rebecca Mairone opted for "quantity over quality" in the bank's mortgage program.
According to The New York Times:
Federal lawyers claimed that Ms. Mairone, who now works at JPMorgan Chase, led a program nicknamed the “hustle,” derived from the initialism HSSL, or the “high-speed swim lane.” The program linked bonuses to how fast bankers could originate loans and as a result, the credit quality of the borrower was given short shrift, the government contended. When the loans were sold to mortgage giants like Fannie Mae and Freddie Mac, they failed, generating more than $1 billion in losses.
The Justice Department said it would seek damages of $848.2 million, although District Judge Jed Rakoff will ultimately decide what penalties the bank faces. The Times describes Rakoff as being critical of regulators for not being tough enough on banks during and following the financial crisis.
Bank of America said in a statement that "The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company," although it defended the company in court anyway.
The bank purchasaed Countrywide, one of the country's largest home lenders, in 2008 for $4 billion, but analysts believe that acquisition has already cost the company between $40 and $50 billion in fines, settlements, and legal fees.