Bank of America Sues Colonial BancGroup for $1 Billion
Pic credit: Taco Werewolf (kid you not)
Bank of America Corp (BAC) sued Colonial BancGroup Inc (CNB) for more than $1 billion in loans and cash, and urged a federal court to order the struggling lender not to sell certain assets, pushing the company into further trouble.
Bank of America, which was the collateral agent for certain loans of Ocala Funding LLC, said Colonial refused to return more than $1 billion of loans and cash which it held as a custodian, agent and bailee. Ocala Funding was a commercial paper vehicle sponsored by Taylor, Bean & Whitaker Mortgage Corp (TBW).
TBW, the 12th-largest U.S. mortgage lender, has shut down its mortgage lending operations and lawyers for the firm said on Aug. 11 that a "bankruptcy filing is imminent."
TBW had offered $300 million to help keep the troubled Montgomery, Alabama-based lender Colonial afloat, but the deal fell apart later in July.
Bank of America asked for a temporary restraining order, debarring Colonial from selling certain proceeds it received from Freddie Mac (FRE) in return of mortgage loans, and certain other loans that the company held, which were owned by Ocala Funding LLC, court documents show.
Bank of America sought an emergency injunctive relief in a complaint filed with a U.S. federal court in Florida on Wednesday.
Colonial refused to return the proceeds and the loans on termination of bailee letters, the U.S. banking giant alleged.
When contacted, a Colonial spokeswoman said the company has no comments on the lawsuit.
Market Ticker threw in $0.02:
Colonial is almost certainly done; my only shock is that the FDIC hasn't (yet) come in and seized that joint.So, uh, does this mean that TBW deal is more than a rumor?
But this is truly amusing. Bank of America gets caught screwing around with the Merrill acquisition, and the SEC tries to do an under-the-counter deal with them, only to get slapped down by an intrepid Judge (who is yet to rule on the finality of the matter.)
BAC, of course, "acquired" Countrywide, one of the worst of the offenders in the liar loan and game-playing department during the housing bubble, and its former CEO ("Tangelo" Mozilo) is under investigation as well.
So now BAC, having gotten apparently hosed in playing intermediary for Colonial and TBW (both of which got nailed with an FBI investigation and ultimately a subpoena) now goes to court and sues, claiming to be due money back that it put forward for companies that are alleged to have been lying, cheating and stealing in the mortgage business.
The plot thickens, just when you thought the rabbit hole couldn't go any deeper! Meanwhile, where are the regulators to keep Bank of America out of trouble? Surely someone caught this? Or were they too busy extracting that pound of flesh from Ken Lewis' ass?
The story thus far may be found here. The TBW/BAC mess may be found here.
Oh, and Jr Deputy Accountant may be found here LOLing her sweet ass off over all of this.