Monday, August 8, 2011

20 Percent Fall in Stocks for Bank of America

Bank of America stocks dropped 20 percent on Monday as investors responded in part to a $10 billion lawsuit that the insurance corporation American International Group brought against the company.

On Monday, AIG announced that it was suing Bank of America for more than $10 billion, charging that BofA, and its acquisitions Merrill Lynch and Countrywide Financial, took part in “massive fraud” when they sold mortgage-backed securities to AIG between 2005 and 2007. AIG says that more than 40 percent of the mortgages were presented as being more secure than they actually were.

BofA closed at $6.51 on Monday, a 20.32 percent drop, after a day of rapid stock declines that saw the Dow shed 634 points. The Dow closed at 10,809 after dipping below 11,000 for the first time since November 2010, making Monday the sixth-worst trading day in Dow history.

Huffington Post