U.S. Magistrate Judge David Cayer said that Bank of America Corp. should win dismissal of a U.S. Justice Department lawsuit accusing it of misleading investors about the quality of loans tied to $850 million in mortgage-backed securities, Bloomberg News reported today. The government’s allegation that the bank made false statements wasn’t properly supported, Judge Cayer said yesterday in a recommendation to dismiss the case. The U.S., which filed a notice that it will object, has a chance to challenge the recommendation before a district court judge and appeal any dismissal. If the case is dismissed, it will be a first for about a dozen companies that have been targeted under the Financial Institution Reform, Recovery and Enforcement Act of 1989, known as FIRREA, which allows the government to sue an individual or group, rather than charge them with a crime, for fraud that affects a federally insured financial institution.
