Bank of America Corp. failed to win dismissal of a U.S. Justice Department lawsuit in which it’s accused of misleading investors about the quality of loans tied to $850 million in residential mortgage-backed securities, Bloomberg News reported yesterday. U.S. District Judge Max O. Cogburn Jr. in Charlotte, N.C., gave the Justice Department 30 days to revise the suit after a magistrate judge earlier found the government’s complaint was deficient and recommended it be dismissed. The case is part of a U.S. bid to punish companies for actions it says helped trigger the financial crisis. The Bank of America case and others like it rely on a law dating to the savings-and-loan crisis of the 1980s that allows the government to punish actions taken too long ago to be covered by other laws. It also lets the U.S. seek larger damages awards. Bank of America will still have a chance to challenge the amended complaint and could appeal any ruling against it.
