Bank Hapoalim alleges fraud and breach of contract relating to the sale of $960 million in mortgage-backed securities to it by Bank of America.
"Bloomberg" reports that Bank Hapoalim (TASE: POLI) has filed a $721 million lawsuit against Bank of America Inc. (NYSE: BAC), the largest bank in the US in terms of assets, with the New York Supreme Court in Manhattan for alleged fraud and breach of contract. The suit relates to the sale of $960 million in mortgage-backed securities (MBS) to Bank Hapoalim.
MBSs were the key trigger to the worst US economic crisis since the Great Depression of the 1930s. The US housing market crashed in 2007, leading to the collapse of MBSs and the closing of hundreds of financial institutions.
A second plaintiff in the case is Principal Life Insurance Co., which is seeking damages over its $239 million investment. The lawsuits were filed on March 30. In early March, Principal Life also sued JPMorgan Chase & Co. for over $114.9 million worth of MBSs.
Bank of America's Lawrence Grayson declined to comment on the report to "Bloomberg".
Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2012
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