We’re willing to bet that Bank of America CEO Brian Moynihan’s office has two dartboards: one featuring the curiously orange face of former Countrywide head honcho Angelo Mozilo, whose company made countless loans to people it knew could never properly repay them; the other with the smirking face of Moynihan’s predecessor Ken Lewis, who was stupid enough to think Countrywide was worth buying, a decision that continues to haunt the nation’s largest bank.
The latest Countrywide-related fiasco is a lawsuit brought against BofA by a group of 16 investors, including the giant California Public Employees’ Retirement System, who claim that Countrywide didn’t quite tell them the truth about the risk involved in the loans it was making.
“Beginning in 2003, Countrywide changed its business model to originate as many loans as possible by increasingly producing subprime, nontraditional and risky loans while disregarding its underwriting standards,” reads the lawsuit, which seeks hundreds of millions of dollars in compensation.
The plaintiffs in the case are among those who opted out of the May 2010 $624 class action settlement with BofA.
Bank of America has already lost billions in legal actions linked to Countrywide. Most recently, it settled with a group of two dozen institutional investors for $8.5 billion.