Sunday, April 15, 2012

Israeli bank sues Bank of America, Merrill Lynch and Countrywide for $720m over RMBS losses

Bank Hapoalim has filed a massive $720 million suit against Bank of America, Merrill Lynch and Countrywide over its losses in the U.S. subprime crisis, alleging that the U.S. institutions misled and defrauded it.

Among Israel's financial institutions, Hapoalim suffered the worst losses in the subprime crisis due to its investments in mortgage-backed securities

Between 2005 and 2007, the bank, led by Shlomo Nehama and Zvi Ziv, snapped up mortgage-backed securities in an attempt to meet its goal of a 15% return on equity by 2007.

By the end of that year, the bank had invested $3.65 billion in such securities. But when the subprime crisis broke out in mid-2007, these securities collapsed as American homebuyers defaulted on their mortgages.

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