Are you aware that Bank of America faces a new lawsuit from UBS? Actually, it’s no longer news that UBS claims it paid Bank of America $1.9 billion to buy $11 billion in those securities, which arose from contracts created before the 2008 financial crisis.
That legal action is a fallout of United Bank of Switzerland’s (UBS) claim that Countrywide Financial, acquired by Bank of America in 2008, had agreed to make UBS whole for such costs.
The lawsuit is a symptom of the persisting legal legacy of the financial crisis and another example of the continuing litigation wrangling over who on Wall Street must bear the costs.
Understanding the UBS Lawsuit Against the Bank of America
Belonging to Countrywide Financial, the mortgages were bundled into securities and UBS sold them before the 2008 financial crisis. Countrywide is owned by Bank of America, acquired in 2008.
UBS claims that Countrywide had agreed to indemnify it against losses of similarly shabby or phony mortgages. UBS resolved claims with federal agencies relating to the securities at a significant cost.
Despite discussions over a liability agreement, Bank of America allegedly shot back at it, leading to $200 million in legal action by UBS.
Implications for Bank of America
This suit is just the latest in a series of lawsuits to arise under Bank of America since its takeover of Countrywide Financial.
The bank has been hit with big-time legal and financial consequences before for the way Countrywide did business when it came to mortgages.
A victory for UBS could mean a significant financial loss for Bank of America and shape how indemnification provisions are treated in other matters.
What is the Current Lawsuit Status and Outlook?
While the lawsuit is still being heard in the New York State court system as of April 2025.
Both sides are in the court, and the financial industry is watching closely in hopes that the case might have an impact on future indemnification disputes and the mortgage-backed securities wider legal landscape.
This case stands as an example of the yearlong and very costly legal aftermath of the financial crisis and highlights the significance of explicit indemnification agreements now in commercial transactions
READ ALSO:
- What is the Chase Bank Glitch About?
- How to Save Money When Building a House
-
Save Money in Spanish: How to Become Financial Powerful Internationally
Can Bank of America be Sued?
Yes, Bank of America can be sued. Complainants against Bank of America can submit a complaint via separate channels, for example, the Consumer Financial Protection Bureau.
Those who wish to take legal action may wish to consult small claims court, as long as the claims are within the court’s financial limits and jurisdiction.
It is recommended to seek legal advice to find the most suitable next step given the case facts.
How to Receive Funds from the Bank of America
Bank of America will pay $21 million due to claims made that the bank charged unpublicized $15 fees for incoming wire transfers between March 8, 2019, and August 31, 2023.
Qualifying customers are those who had checking/savings accounts with us during the period and paid these fees.
Further, current customers will get their settlement payments as account credits; past customers will be given checks.
The cutoff date for exclusion and objection was September 21, 2024, and the final approval hearing has been set for last October 21, 2024.
Knowing the Bank of America Wire Transfer Fee Lawsuit
The class-action suit claimed that Bank of America deceived account holders by slapping a $15 fee on incoming wire transfers without their permission.
Although Bank of America did not admit to doing anything wrong, Bank of America has agreed to a 21 million settlement to resolve claims.
Under the settlement agreement, those customers are eligible for a proportionate portion of the settlement fund based on the fees they paid during the relevant time period.
READ ALSO:
- How to Save Money on Books: 10 Excellent Tips to Get Cash
- How to Save Big Money at Menards on Shopping
Bank of America’s Policy on Reimbursing Scammed Funds
The Bank of America has a $0 Liability Guarantee in place to protect their customers from anyone else using their debit or credit cards.
For customers to be able to take advantage of this protection, they must report unauthorized transactions ASAP.
Once Bank of America has been notified, they will look into the claim, and if the transaction ends up being fraudulent, the customer will be credited back.
It is crucial to notify any suspicious activity as soon as possible in order to be eligible for reimbursement.
Bank of America Dispute Policy
When a customer contests a transaction, Bank of America must perform an investigation to verify the legitimacy of the claim and decide if the merchant made an error.
If the dispute is legitimate, the bank may allow a chargeback to be posted against the merchant.
This is a precursor to a legitimate chargeback and gives the bank a chance to increase the opportunity for semantic collision and to find a workable resolution for customer needs.
How Much Did UBS Sue Bank of America For?
UBS sued Bank of America over a $200 million row from the 2008 crisis. At issue in the suit is Countrywide Financial, a mortgage-loan operator that Bank of America bought out in 2008.
UBS claims that Countrywide had agreed to insure it against legal expenses for mortgage-backed securities that proved to be faulty.
UBS has since racked up large costs in resolving lawsuits related to those riskier mortgages and is now seeking for Bank of America to pick up the tab.
UBS claims Bank of America, as Countrywide’s successor, bears the liability for these indemnification claims.
The case dramatizes the unfinished agenda from pre-crisis activities that remains to fuel costly disputes involving the world’s financial elite.
READ ALSO:
What Are the Risks for Bank of America in the UBS Lawsuit?
The UBS lawsuit puts Bank of America at risk from a reputational hit and a financial risk. If the court decides with UBS, Bank of America may have to pay 200 million in damages, creating a precedent for other Countrywide-related claims.
Even if the bank prevails, it will still face scrutiny by regulators over how it treats indemnity yelling. Further, the controversy again opens up Bank of America’s pre- and post-cluster history, especially pertaining to mortgage-backed securities.
This lawsuit could also impair investor trust much more profoundly if UBS can provide substantial evidence that indemnification clauses were disregarded.
Ultimately the lawsuit serves as a warning about the long-term legal consequences of a big acquisition.
How the UBS Lawsuit Reflects Lingering Fallout from the 2008 Financial Crisis?
The legal battle between UBS and Bank of America is a stark reminder that the 2008 financial crisis still kicks back on Wall Street.
At the heart of UBS’s complaint lies a pair of toxic mortgage-backed securities created before the meltdown and some indemnification obligations linked to them.
In spite of being laid down over a decade ago, these financial instruments continue to cause litigation and huge costs.
Many a bank, including Bank of America, has cost billions in out-of-court settlements to investors and regulators in connection to the misled mortgage practices.
UBS’s suit shows that even as banks embark on new strategies and technology, old liabilities can rise. It highlights the need for due diligence in acquisitions above all when legal risks cover such a long time span.
Conclusion
The UBS vs. Bank of America lawsuit is a perfect example of the lingering legal problems arising from the 2008 financial crisis and the intricacies of indemnification agreements in the financial business.
Furthermore, Bank of America’s involvement in any of the legal issues, like the wire transfer fee settlement, reveals the issue of transparency and account undertaking agreement compliance.
It remains to be the case that the clients have to use conscientious jeopardy in the current definitive evils trial.