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The insurer AIG is suing Bank of America Corp to recover more than $10 billion of losses from a "massive fraud" on mortgage debt, deepening the morass of litigation faced by the largest U.S. bank.
American International Group, the insurer that sold off several major units in its effort to repay its 2008 bailout, plans to keep its once-troubled but now rapidly growing mortgage-insurance unit.
A bellwether index of subprime mortgage bonds rallied, a day after the New York Fed suspended further auctions of so-called Maiden Lane II securities acquired in the AIG bailout.