Bank of America is facing harsher penalties than previously expected for its role in the housing crisis, according to a new report.
The Obama administration asked a federal judge to raise the penalty for Bank of America to $2.1 billion in a Wednesday court filing, up from the government’s previous request of $863.6 million, Reuters reports.
The penalties stem from what the Justice Department claims were bad mortgages that Bank of America’s subsidiary, Countrywide Financial Corp., sold to government lenders Fannie Mae and Freddie Mac in 2007 and 2008.
Bank of America acquired Countrywide in July 2008, after many of the bad mortgages had already been sold, but the government argues it should still be on the hook for the actions of the company it purchased.
This comes after a federal jury in October found that Bank of America could be held liable for fraud from its Countrywide unit in a civil lawsuit that was a separate case from the government’s current claims. But the government argued that this case set a precedent that the bank could be sued for the actions of Countrywide.
In Wednesday’s filing, lawyers for the Justice Department argued that Bank of America should face the maximum penalty to “punish defendants for their culpability and bad faith, and to deter financial institutions and their executives who would engage in similar fraudulent mortgage schemes,” according to the report.