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AIG files $10.5bn lawsuit against Bank of America

Bailed-out insurer, American International Group (AIG) has filed a $10.5bn lawsuit against Bank of America (BofA) over an alleged sale of residential mortgage-backed securities (RMBS).

The lawsuit alleged that BofA had misrepresented the quality of more than $28bn of RMBS sold to AIG between 2005 and 2007.

The 200-page AIG suit broadly focused on how the alleged faulty mortgages were resold by BofA and its two divisions, Merrill Lynch and Countrywide Financial.

The claim is supposedly one of the largest institutional claims arising from the 2008 financial crisis.

AIG is preparing similar suits against other large financial institutions, including JPMorgan Chase, Goldman Sachs and Deutsche Bank, according to Media reports.