A Manhattan judge indicated Monday he was “troubled” by how the U.S. government applied a rarely used law in a suit against Bank of America Corp over the sale of toxic mortgages to Fannie Mae and Freddie Mac . The hearing before U.S. District Judge Jed Rakoff marked a challenge of the U.S. Department of Justice’s bid to bring fraud lawsuits against Wall Street banks under a powerful law enacted following the savings and loan scandals of the 1980s. Rakoff held off on a ruling, saying he would issue a decision by May 13 on whether to dismiss the lawsuit, which blames Bank of America for more than $1 billion in losses incurred by Fannie and Freddie. More on Reuters here.
