BofA asks court to toss $1.27B fine, reject judge

05/04/2015

BofA asks court to toss $1.27B fine, reject judge

NEW YORK (AP) – April 23, 2015 – Bank of America asked a federal appeals court Wednesday to toss out a $1.27 billion fine against it, saying the case brought by the federal government after the 2008 financial crisis should never have gone to trial.

The bank said in papers filed with the 2nd U.S. Circuit Court of Appeals in Manhattan that the case against it was unfair and "utterly unprecedented."

It said the trial judge – Jed Rakoff – should be removed from the case if it is returned to the lower court. The bank said Rakoff might be perceived as biased based on comments he made, including criticizing the Justice Department for failing to prosecute bank executives for their roles in the crisis.

The bank, headquartered in Charlotte, North Carolina, called the penalty "grossly excessive."

The judge declined to comment. Last year, he said the fine was necessary to punish the bank for a program "driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole."

Rakoff imposed the fine after a jury concluded in October 2013 that the bank was liable for Countrywide Financial's role in selling risky loans to the government housing agencies through a program nicknamed the "Hustle" from August 2007 to May 2008. The jury found that Countrywide executives deliberately misrepresented the quality of mortgages being sold.

Bank of America purchased Countrywide in 2008 as the financial crisis was unfolding.

The bank said in its filing Wednesday that Rakoff, while presiding over the case, made many public statements in multiple forums urging prosecution of bank executives. It said he pressed the government to seek greater penalties and awarded an amount greater than the government had initially requested or the law permits.

The bank also blamed Rakoff's "evidentiary rulings" for the outcome, saying he made it impossible to offer a meaningful defense. And it said the government inappropriately used a law against it that was enacted after the 1980s savings-and-loan crisis to protect federally insured financial institutions from misconduct by others.

It asked the appeals court to order a new trial or at least to nullify the damages award and return the case to award penalties no higher than the statutory maximum of $1.1 billion.

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