""American International Group (AIG)"":http://www.aigcorporate.com/index.html is heading to court with ""Bank of America (BAC)"":https://www.bankofamerica.com/. AIG filed a suit against the bank Monday, targeting BAC's alleged misrepresentation of mortgage-backed securities.[IMAGE]
AIG's claims focus on BAC's Merrill Lynch and Countrywide Financial components, and the entity is seeking over $10 billion in compensation in what could be the largest mortgage-security lawsuit ever filed by an individual investor.
The suit alleges that the bank fraudulently represented the quality of mortgage-backed securities purchased by AIG, resulting in an estimated $28 billion in losses for AIG.
The taxpayer-owned company is one of numerous entities filing against various banks, over claims that the financial institutions misrepresented high-risk securities, leading to the mortgage crisis.[COLUMN_BREAK]
Around 90 lawsuits related to the mortgage mess have been initiated to date, and AIG's legal representation, McCarthy Lawyer Links, says that AIG will also file similar cases against Goldman Sachs, JP Morgan Chase, and Deutsche Bank.
Private litigation actions are outpacing those being brought by the ""Justice Department"":http://www.justice.gov/, which has concluded most of its bank-related investigations without filing lawsuits.
Commenting to the _New York Times_, Justice Department spokesperson Alisa Finelli noted that the government was taking legal avenues when deemed necessary, citing the successful prosecution of Taylor Bean & Whitaker's chairman.
Finelli said, ""Prosecutors and agents determine on a case by case basis the importance of relevant evidence developed in a private litigation and how such evidence should be pursued. Civil litigation involves a lower standard of proof than is required for a criminal prosecution, where prosecutors must have sufficient evidence to prove beyond a reasonable doubt that a crime has been committed.""
BAC is expected to refute AIG's claims, as it has during previous filings. Lawrence Di Rita, a spokesperson for BAC, said in a general statement to the _New York Times_ that disclosures made during the securities process were likely thorough enough for investors within sophisticated companies like AIG.
Di Rita added that it's reasonable to say that factors like dropping home values also contributed to faltering loans, though he pointed out that BAC had yet to see the AIG suit.