The US has filed a fraud lawsuit against Bank of America, accusing it of causing taxpayers more than $1bn (€770m) of losses by selling thousands of toxic mortgages to Fannie Mae and Freddie Mac.

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.

Wall Street ended a temperamental session widely mixed today after investors grappled with JPMorgan Chase & Co’s government-backed buy-out of stricken investment bank Bear Stearns.

Wall Street advanced sharply today as the Federal Reserve opened a two-day meeting expected to bring another interest rate cut to revitalise the US economy.

Wall Street plunged again lower today amid renewed fears that the financial sector’s troubles with bad credit won’t soon end and that some consumers are buckling under signs of a slowing economy.