Blamed For Everything, AIG Blames Countywide

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March 20, 2009 01:07 PM EDT by Brian Sullivan

Blamed For Everything, AIG Blames Countywide

In a case of "our lawyers can beat up your lawyers," a unit of AIG today sued Countywide Financial (now owned by Bank of America) for allegedly misrepresenting the quality of loans it was making.

From the AP story:

United Guaranty Mortgage Indemnity Co. filed suit in U.S. District Court, accusing Countrywide of breach of contract, fraud, negligence, and unfair competition and business practices.

United Guaranty alleges Countrywide "abandoned its own underwriting guidelines to boost its market share and then misrepresented the quality of its loans so that United Guaranty would provide insurance coverage for them."

The AIG unit is seeking unspecified punitive damages, and wants the insurance policies on the loans and its payments on the policies to be canceled.

AIG's lawyers will have to get in line. Countrywide is already the subject of multiple lawsuits, including actions by states such as California accusing the company of lending money to people who shouldn't have been lent money.

Just about the only thing AIG hasn't been blamed for is global warming (though that may be coming).

4 Comments

Fred

Home buyers, not banks pay for mortgage insurance premiums. Once again, the home buyer, aka taxpayer, gets screwed. Here, Countrywide collects the premium from the home buyer, passes a percentage in premium to insuror AIG/UG, who now refuses to honor loss claims. Meanwhile, the taxpayer funds (via TARP and similar) this litigation and the continuance of operations at AIG and BofA/Countrywide, all to figure out who gets claim to these mortgage insurance premiums originated from the homebuyer/taxpayer. So, who should I root for - the plaintiff or defendant? Gee.

March 23, 2009 at 10:37 am

dom youngross

Twenty years from now people and lawyers will still be arguing over who deserves the blame for the financial problems we now face. So best course of action is to just stop handing out taxpayer money to bail this, that, and the other out -- and run up obscene federal deficits under Obama. Unless of course everyone can agree to send $30K to me tax free for a spanking new F-150, the 4WD extended cab, not the cheap base model.

March 21, 2009 at 12:54 pm

Bruce Emory

This makes sense to me. If AIG has failed based upon its insuring of federally mandated mortgage loans then the US government is primarily to blame for the problem and more specifically; Barney Frank, Chris and the gang. I wonder if this ultimately comes to daylight.

March 20, 2009 at 6:08 pm

Pamela

lol...cry...lol...cry... I am reminded of the "Superfund" to clean up toxic pollution a couple of decades past. Didn't the lawyers end up with most of that money also? And, btw, these AIG bonuses were world-wide, not just in the USA. How is the idiot congress going to tax some dude laughing his fool head off in France? cry...lol...cry...drink heavily... Tea parties aren't strong enough, is there a bourbon party nearby?

March 20, 2009 at 2:30 pm

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Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.
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