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.

Congress passed a housing rescue bill today aimed at sparing 400,000 struggling homeowners from foreclosure.

A rising tide of late mortgage payments and home foreclosures poses considerable dangers to the US economy, Federal Reserve chairman Ben Bernanke warned anew as he urged Congress to take additional steps to alleviate the problems.

US President George Bush today outlined ways to help US homeowners facing foreclosure – the administration’s first effort to deal with an expected wave of defaults fuelled by the mortgage crisis that has roiled financial markets around the world.