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AIG sues Bank of America for $10bn

Aug 08 2011 16:37 AFP

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New York - US government-controller insurer AIG filed a $10bn suit against Bank of America Monday for losses on the mortgage-based securities that sparked the 2008 US financial crash and AIG's own near-bankruptcy.

AIG alleges that Bank of America misrepresented the quality of the mortgage-backed securities it sold to the insurer.

"Bank of America's fraud cause billions of dollars in damage to AIG and we are bringing this suit today to protect AIG and the taxpayers' stake in it," said Mark Herr, AIG spokesman.

According to the New York Times, the $10bn AIG wants to recover represents losses on $28bn in investments.

AIG had to be rescued with $180bn from the US government during the collapse, and the government remains its largest shareholder.

Lawrence Grayson, a spokesperson for the bank, rejected AIG's allegations, saying it could only blame itself for bad investment choices.

"AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets," he said.

"It is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors."

But AIG said it will not likely be its last lawsuit "against counterparties that have sought to profit at our expense."

"As AIG has said in the past, we are looking carefully at what counterparties and others have done to AIG, and we intend to take legal action against those who have harmed us," it said.

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