Bank of America to be sued by AIG

8 August 2011

The American International Group (AIG) is to sue Bank of America regarding hundreds of mortgage-backed securities.

In doing so, the organisation becomes the latest in a line of investors looking for compensation over the mortgages that helped exacerbate the financial crisis, the New York Times reports.

The lawsuit could become the biggest mortgage security action of its kind as it aims to recover more than $10 billion in losses on investments worth $28 billion.

It centres around claims Bank of America made misrepresentations regarding the standard of the mortgages the lender - along with its Merrill Lynch and Countrywide Financial branches - offered to investors.

Lawrence Dr Rita, a spokesman for Bank of America, said: "Now you have a lot of investors and lawyers who are seeking to recoup the losses from an economic downturn."

He noted the bank - which has a history spanning more than 200 years - has yet to see AIG's suit.

By Tony Aynsley

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