The US Court of Appeals for the Second Circuit [official website] on Monday overturned [opinion, PDF] a 2013 jury verdict that found Bank of America liable for fraud and imposed a penalty of more than $1.2 billion. The Second Circuit determined [LA Times report] that there was not enough evidence provided to establish that the Countrywide Financial unit of Bank of America committed mail and wire fraud during the years leading up to the financial crisis. Countrywide was not the only company selling questionable mortgages to Fannie Mae and Freddie Mac at the time, but the verdict against Bank of America was held out as the first time banks were held liable for mortgage fraud in events leading to the crisis. However, the Second Circuit stated that there must be proof of fraudulent intent in the setup of the contracts. The Court stated:

The government did not prove—in fact, did not attempt to prove—that at the time the contracts were executed Countrywide never intended to perform its promise of investment quality. Nor did it prove that Countrywide made any later misrepresentations as to which fraudulent intent could be found.

Despite this decision, financial institutions have paid out billions of dollars in settlement agreements since 2008.

The effects of the 2008 financial crisis are still reverberating through the legal system. Last month a federal judge unsealed an opinion [JURIST report] from late March ruling that the government did not have grounds to designate the major insurance company, Metlife, as “too big to fail,” a designation only four firms have received. The Financial Stability Oversight Council (FSOC) [official website] determined in 2014 that financial distress at Metlife could significantly affect the national economy and therefore the company deserves increased federal scrutiny. The judge held, however, that such a designation was unsupported by substantial evidence and disregards the costs that Metlife will inevitably suffer. In February Morgan Stanley [corporate website] agreed to pay about $3.2 billion to settle charges [settlement agreement, PDF] that it misled investors in residential mortgage-backed securities [JURIST report]. In September the US Department of Justice [official website] unveiled a new policy [text, PDF] for white-collar crimes, which targets individuals accused of crimes instead of the companies [JURIST report].