AIG sues bank over debt ‘fraud’

AMERICAN International Group is suing Bank of America to recover more than $10 billion (€7bn) over a “massive fraud” on mortgage debt, deepening the litigation morass facing the largest US bank.

Bank of America shares fell as much as 16.4% to their lowest level since April 2009, under-performing its main rivals, amid a market decline that followed Standard & Poor’s downgrade of the United States credit ratings.

AIG said it expects to pursue other litigation to recover losses from counterparties that “sought to profit at our expense”. Taxpayers own 77% of the New York-based insurer, which received $182.3bn of government bailouts.