Judge endorses US use of fraud law against Bank of America

A federal judge has endorsed a broad interpretation of a savings-and-loan era law that the U.S. Justice Department is trying to use in cases against Wall Street banks.

U.S. District Judge Jed Rakoff in Manhattan said Monday that a “straightforward application of the plain words” of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA) allowed the interpretation sought by the government.

The law has a low burden of proof, strong subpoena power and a 10-year statute of limitations, twice as long as the typical limit for fraud cases.