Banks, Mortgage Crisis | featured news

"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress," said New York City Mayor Michael Bloomberg at an event for business leaders.

Bank of America Corp is working to improve profits by reducing its number of problem mortgages and cutting other costs, Chief Executive Brian Moynihan told shareholders on Wednesday. Moynihan, speaking at the company's annual meeting in downtown Charlotte, said the mortgage business of the largest U.S. bank by assets is "still struggling mightily" as it slowly crawls out from under the billions in soured home loans.

The New York attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the investigation.

Frustrated by the banks' inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-to-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.

Bank of America trails other banks in refinancing mortgages ahead of government deadline.