About 43 percent of the loans sold to the mortgage giants were materially defective, the government said.

The lawsuit was the first financial crisis-related case against a bank by the Justice Department to go to trial under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

The law, passed in the wake of the 1980s savings-and-loan scandals, covers fraud affecting federally insured financial institutions.

Bank of America’s case was the first to go to trial, a rarity given that banks more typically choose to settle government claims instead of face a jury. But Bank of America had said that it “can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.”

In a statement, Bharara said Bank of America “chose to defend Countrywide’s conduct with all its might and money, claiming there was no case here.”

SOURCE: natlawreview.com…