The Federal Reserve Bank of New York entered into a secret agreement with the Bank of America back in July 2012, according to the New York Times latest report. According to documents recently produced as part of a California lawsuit, it became clear that the New York Fed released Bank of America from all fraud claims on mortgage securities the Fed had bought as part of the government’s bailout of AIG in 2008.
Fresh on the heels of Too Big to Jail it is now evident that it wasn’t just Big Banks that profited from the mass fraud in 2008. As billions, if not trillions, of dollars were transferred from ordinary Americans to banks that conveniently turned a blind eye, the government couldn’t help be get in on the profiteering and crony capitalism.
AIG is now suing Bank of America for nearly $7 billion worth of losses it sustained due to allegedly fraudulent securities from Bank of America’s Countrywide unit. According to the terms of the agreement, however, Bank of America paid $43 million to the New York Fed in exchange for a release from litigation on various securities as well as an agreement to testify on behalf of Bank of America against A.I.G.
The financial sector is the largest source of campaign contributions to federal candidates and political parties. From 2009 to 2010 the Center for Responsive Politics noted that the financial services sector has dispatched nearly 1,500 “revolving door” lobbyists alone.