Judge endorses savings and loan era law, may be used against Wall Street

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Justice Department trying to use law against Wall Street Banks

Reuters News reports that a federal judge has endorsed a broad interpretation of a savings-and-loan era law that the Justice Department is trying to use in cases against Wall Street banks.

U.S. District Judge Jed Rakoff in Manhattan said Monday that a 'straightforward application of the plain words' of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA) allowed the interpretation sought by the government.

The law has a low burden of proof, strong subpoena power and a ten-year statute of limitations, twice as long as the typical limit for fraud cases. Rarely asserted until recently, it has become the basis of three lawsuits by lawyers under Manhattan U.S. Attorney Preet Bharara against banks including Bank of America, Wells Fargo and Bank of New York Mellon.

The latest decision came in a case the Justice Department brought last October against Bank of America over toxic mortgages that its Countrywide Financial mortgage unit sold to Fannie Mae and Freddie Mac in the financial crisis.

The government's case, which is set for trial on September 23, focuses on a program instituted in 2007 by Countrywide called 'High Speed Swim Lane' and also known as 'HSSL' or 'Hustle.'

To access the complete Reuters article hit the link below 

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