Posted Aug 08, 2011 07:38 pm CDT
American International Group today sued Bank of America in New York State Supreme Court, alleging that the global financial services company engaged in “massive fraud” when it sold AIG more than $28 billion in residential mortage-backed securities.
The lawsuit seeks more than $10 billion from Bank of America, the Associated Press reports. According to the complaint, Bank of America and two companies it acquired, Countrywide and Merrill Lynch, sold AIG the securities between 2005 and 2007, when the U.S. real estate market was huge. The loans were inferior, according to the complaint, and based on inflated credit ratings that hid the their true risk.
Bank of America denied the allegations, the Associated Press reports, and claims that AIG “recklessly” chased investments with high returns.