Civil fraud charges filed against Bank of America

The Washington Post - New York Attorney General Andrew M. Cuomo filed fraud charges Thursday against Bank of America and two of its former top executives, alleging that they lied not only to investors but also to government officials who were orchestrating a massive bailout of the bank in the final months of 2008.

The company and two former executives -- chief executive Ken Lewis and Chief Financial Officer Joseph Price -- were accused of misleading federal officials about the size of losses at Merrill Lynch, the troubled investment bank that Bank of America was in the process of buying. The lawsuit alleges that the deception was part of a successful effort to trick the officials into providing an additional infusion of bailout money.

Cuomo also charged the bank and the former executives with lying to investors about mounting financial losses at Merrill Lynch and concealing billions of dollars in bonuses paid to employees. The bank and executives denied the charges.

Bank of America separately agreed to pay $150 million to settle two earlier lawsuits brought by the Securities and Exchange Commission charging that the company lied to shareholders. The SEC's legal action, which was less aggressive than Cuomo's, did not include fraud charges and cleared individual executives of wrongdoing.

Cuomo's lawsuit raises the prospect that senior federal officials, both former and current, could be called to provide courtroom testimony for the first time about their role in rescuing the financial system. Read more.