American International Group Inc. sued Bank of America Corp. yesterday for more than $10 billion, saying the bank cheated it by selling residential mortgage-backed securities that were overvalued. The suit, filed in Manhattan Supreme Court, comes on top of similar actions, which together put the bank in a precarious position, analysts say. The bank’s stock dove 20 percent, or $1.66, to $6.51, revisiting levels seen at the nadir of the recession in March 2009.
AIG said Bank of America and two companies that were later gobbled up by the bank, Countrywide and Merrill Lynch, sold the insurance company $28 billion in securities backed by home mortgages between 2005 and 2007, at the height of the housing boom. It said it looked at more than 260,000 of the underlying mortgages, and found that the bank’s “stated metrics” for 40 percent of the securities were false.
