New York, NY — A New York judge has ordered the Federal Reserve to pay more than $10.4 billion in punitive damages against a Bankrupt, Negligent and Fraudulent Bankrupt entity and a $500 million settlement fund for the mismanagement of a mortgage foreclosure settlement.
The U.S. Court of Appeals for the Second Circuit on Thursday denied a request by the US Department of Justice and Bank of America to have the $10,000 settlement fund wiped out as part of the settlement.
The case was filed in October 2014, but is still under review by the courts.
Bankruptcy lawyers filed the lawsuit in January to stop the bank from issuing loans to anyone but those with a qualifying credit history.
They also argued that the bank was illegally hiding loans to a few of its top executives from federal regulators, including then-Fed Chair Janet Yellen.
The judge rejected those arguments and ordered the $1.3 billion settlement fund to be wiped out in addition to the $5.8 billion that the DOJ and Bank wanted to be paid.
Yellen was nominated to be Fed Chair in July 2016, and Fed Chair Ben Bernanke was confirmed in January 2017.
Bernanke, who is now the US Treasury Secretary, announced the Fed would end its controversial practice of “quantitative easing” and instead hold interest rates near zero.