Obama Files Flurry Of Lawsuits Against Big Banks

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Investors Business Daily:

On the cusp of the election, the Obama administration has filed a flurry of lawsuits against banks in a last-ditch effort to appease liberal critics who wanted to see more Wall Street prosecutions after the financial crisis.

The Justice Department took aim Wednesday at Bank of America in a suit seeking to collect up to $3 billion in penalties from the nation's largest bank as compensation for allegedly defrauding Fannie Mae and Freddie Mac.

The government claims BofA's mortgage unit, Countrywide Financial, stuck the failed government-sponsored mortgage giants with subprime loans that soured in the housing bust.

Earlier this month, federal prosecutors filed a similar suit against Wells Fargo, accusing the nation's largest mortgage lender of underwriting "reckless" and "deficient" FHA loans.

Delinquencies are rising at FHA, and the HUD-run affordable-housing agency may need a taxpayer bailout like Fannie and Freddie, which together have already cost taxpayers almost $200 billion.