Bank of America stock hammered after AIG suit# Stock
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Bank of America shares took a drubbing Monday as investors learned that
insurer American International Group was suing the company for billions of
dollars over alleged mortgage securities fraud.
Bank of America (BAC, Fortune 500) fell 10% while shares of AIG (AIG,
Fortune 500) were down more than 5.5% in Monday trading. Bank of America has
already lost more than 45% of its value this year, while AIG has tumbled
more than 59%.
Print AIG said Bank of America's alleged fraudulent activity "caused
billions of dollars in damage" to its business.
AIG's lawsuit is specifically tied to hundreds of mortgage-backed securities
that the insurer claims Bank of America (BAC, Fortune 500) -- and its
Merrill Lynch and Countrywide Financial units -- knew were not top quality,
according to published reports.
The insurer is seeking to recover more than $10 billion in losses from Bank
of America on $28 billion of investments, in what could be the largest
mortgage-security-related action filed by a single investor, the reports
said.
"We are bringing this suit today to protect AIG and the taxpayers' stake in
it," AIG spokesman Mark Herr said in a statement.
"As AIG has said in the past, we are looking carefully at what
counterparties and others have done to AIG, and we intend to take legal
action against those who have harmed us," he said.
Herr added: "This is not the first lawsuit that AIG has filed against
counterparties that have sought to profit at our expense, and we anticipate
that it will not be the last."
Back in 2008, the government gave AIG a $180 billion lifeline to keep the
insurance company out of bankruptcy at the height of the financial crisis.
AIG has been slowly working toward paying back that loan. It made some
progress on that front in May, when it sold 100 million shares, while
Treasury, the bailed-out insurer's biggest shareholder, sold 200 million
shares.
Earlier this month, AIG posted a second-quarter profit, even though its
shares plunged to their lowest level since early last year.
Bank of America could not immediately be reached for comment
insurer American International Group was suing the company for billions of
dollars over alleged mortgage securities fraud.
Bank of America (BAC, Fortune 500) fell 10% while shares of AIG (AIG,
Fortune 500) were down more than 5.5% in Monday trading. Bank of America has
already lost more than 45% of its value this year, while AIG has tumbled
more than 59%.
Print AIG said Bank of America's alleged fraudulent activity "caused
billions of dollars in damage" to its business.
AIG's lawsuit is specifically tied to hundreds of mortgage-backed securities
that the insurer claims Bank of America (BAC, Fortune 500) -- and its
Merrill Lynch and Countrywide Financial units -- knew were not top quality,
according to published reports.
The insurer is seeking to recover more than $10 billion in losses from Bank
of America on $28 billion of investments, in what could be the largest
mortgage-security-related action filed by a single investor, the reports
said.
"We are bringing this suit today to protect AIG and the taxpayers' stake in
it," AIG spokesman Mark Herr said in a statement.
"As AIG has said in the past, we are looking carefully at what
counterparties and others have done to AIG, and we intend to take legal
action against those who have harmed us," he said.
Herr added: "This is not the first lawsuit that AIG has filed against
counterparties that have sought to profit at our expense, and we anticipate
that it will not be the last."
Back in 2008, the government gave AIG a $180 billion lifeline to keep the
insurance company out of bankruptcy at the height of the financial crisis.
AIG has been slowly working toward paying back that loan. It made some
progress on that front in May, when it sold 100 million shares, while
Treasury, the bailed-out insurer's biggest shareholder, sold 200 million
shares.
Earlier this month, AIG posted a second-quarter profit, even though its
shares plunged to their lowest level since early last year.
Bank of America could not immediately be reached for comment
