Los Angeles sues Bank of America for discriminatory lending practices

Adds the bank to a similar suit filed against Wells Fargo and Citigroup

On Dec. 6, Bank of America was added to a lawsuit filed by the city of Los Angeles, which seeks damages from banks that allegedly participated in discriminatory lending practices. Similar charges were filed against Wells Fargo & Co. and Citigroup Inc. late last week.

The filing charges the banks with predatory lending tactics that "led to a wave of foreclosures that continues to diminish the City's property-tax revenues and increase the need for, and the costs of, City services," according to a city attorney's office statement announcing the new lawsuit.

The damages are sought in order to recoup the considerable tax revenue losses and property devaluation that the city faced as a result of the foreclosures.  

Bank of America said the city had "no basis" for its claims. "We responded with urgency to rising mortgage defaults that resulted from the country's severe economic downturn and the personal financial hardships…that resulted for so many Americans," the bank said in a statement Friday evening, the Wall Street Journal reports. Citibank and Wells Fargo have called the lawsuit meritless.

The move comes following a number of other actions against large lending banks in recent months.

Deputy Attorney General James Cole spoke out against banks at a conference at Washington D.C. on Nov. 19, where he indicated that many  banks are not yet up to the government’s standards, citing recent investigations into Bank of AmericaWells FargoMorgan Stanley.

In addition J.P. Morgan & Chase Co. recently paid $13 billion to settle probes into its mortgage dealings prior to 2007.

This move and the others comes as more cities, states and Federal agencies seek to hold banks accountable for risky moves that lead to the finical crisis.

 

For more on banking oversight check out these stories:

N.Y. court set to decide on BofA $8.5 billion settlement

JPMorgan settlement represents possible turning point for Eric Holder

JPMorgan cuts deal with investors over mortgage-backed securities

Associate Editor

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Chris DiMarco

Chris DiMarco, Associate Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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