- As if. -  AIG is the latest company to announce that it's preparing to sue Bank of America over hundreds of mortgage-backed securities. They seek to recoup more than $10bn in losses on $28bn of investments - probably the largest suit filed by a single mortgage-related securities investor.

AIG's Claims. AIG alleges that Bank of America - and its Merrill Lynch and Countrywide Financial units - misrepresented the quality of mortgages bundled in securities sold to investors.  AIG has need for the funds, as it is still mostly taxpayer-owned after its 2008 bailout.  AIG is also prepping to sue other big banks, including:  Goldman, JPMorgan Chase, Deutsche Bank. 

All told, some 90 lawsuits related to mortgage securities have been filed, seeking nearly $200 billion.  The number of private suits has swelled following a lack of successful action from the Justice Department.  The DOJ has closed many of its investigations into big banks without filing any charges - it's only brought 3 cases against employees of large firms, and none against big bank executives.  The Justice Department's inability to prosecute these difficult cases has left the burden of recovering lost funds to private litigation.   [CNBC, 8/8/11]

Note:  Also, see C-I's related stories about Bank of America - posted 8/8 in Behind The News.