(photo credit: Erich Stüssi)
This looks like a double-dose of look-before-you-leap.
One of the country’s largest financial institutions, AIG, is suing another large financial institution, Bank of America (BofA), because of some bad purchases – on both sides. BofA recently acquired two companies, which AIG says engaged in massive fraud with all those subprime mortgages that led to the housing crisis. (Both companies were under investigation by the government for the same thing, but the criminal charges were eventually dropped.)
Makes you think that maybe BofA should’ve been a little more careful about doing its homework before buying those companies and becoming legally responsible for their subprime mortgage dalliances. Kind of like doing your homework before you buy stock in a company - you really want to know what you’re buying into when you hand over your money.
Now for another case of look-before-you-leap: BofA is saying that AIG had all the resources it needed to figure out whether it was a good idea to buy those mortgage securities in the first place. It’s not like the big bad banks were ripping off a little old grandma here…
They may all be right - who knows? But one thing seems pretty clear: CAVEAT EMPTOR!
How carefully do you do YOUR homework before shelling out a ton of cash?