I’ve taken a closer look at the US Attorney from the Southern District of New York’s $1 billion lawsuit against Bank of America – particularly their subsidiary Countrywide – for “the hustle,” the program of selling mortgages with practically no underwriting and passing them on to Fannie Mae and Freddie Mac. And there’s something interesting right on the first page. The lawsuit isn’t called “The US v. Countrywide Financial Corp.,” but “The US, ex rel. Edward O’Donnell v. Countrywide Financial Corp.”

Who’s Edward O’Donnell? He’s a former Countrywide Home Loans executive vice president, who blew the whistle on the company for their fraudulent mortgage practices with a qui tam lawsuit in February. The lawsuit from SDNY yesterday builds on O’Donnell’s whistleblower claim, and gives him a chance to cash in. Eight months later, the government picked up on O’Donnell’s False Claims Act allegations and put them into action.

Alison Frankel believes this is faster than the normal practice of intervening in a qui tam claim, in part because of the pressure on the government to derive some accountability for the housing crash. She also thinks we should be happy about this:

The result is a complaint that features inside allegations from O’Donnell about Countrywide’s so-called “Hustle” program to funnel increasingly deficient loans to Fannie Mae and Freddie Mac alongside inside information that government investigators presumably obtained from Fannie and Freddie officials. The combination makes for a compelling case that Countrywide systemically deceived the government-sponsored entities about the loans it was selling them, then refused to live up to contractual obligations to repurchase deficient loans. (As Reuters reported Monday, Bank of America said accusations that it failed to repurchase loans are “absolutely false.”)

The U.S. Attorney’s allegations go much deeper than O’Donnell’s initial suit, which suggests that the government has been busily investigating in the months since O’Donnell initiated the case. According to the complaint filed Wednesday, in 2007 — with fewer MBS sponsors in the market for the subprime loans that had been Countrywide’s specialty — the bank was increasingly desperate to sell supposedly better-quality mortgages to Fannie Mae and Freddie Mac. To speed up the process of approving loans, Countrywide’s Full Spectrum Lending unit instituted “the Hustle” (or HSSL, for High Speed Swim Lane) program, which stripped away underwriter review for loans that were deemed acceptable by the bank’s automated mortgage review system. But that automated system, according to the complaint, depended on information supplied by the borrower and input by a loan processor. There were few to no controls in the Hustle approval process; according to the feds, even loans in which the borrower’s income wasn’t independently verified went unreviewed by underwriters.

It sounds to me like the government combined O’Donnell’s insider information, and the FHFA’s existing, year-old lawsuits against banks who passed deficient loans to the GSEs, and the refusals by BofA to repurchase the bad mortgages, into one super-case that exposes the origination fraud and how corrupt lenders and Wall Street banks joined forces on the project, inflating the bubble all the while.

But while specific executives at Countrywide are named in the suit, none of them will face criminal charges. And in the end, the US Attorney seeks $1 billion in damages, a paltry sum for a mega-bank (and that’s an opening bid). BofA has settled similar cases in the past, including one over almost precisely the same fraud run on the Federal Housing Administration. But it’s the cost of doing business – more precisely, the cost of buying Countrywide – and life will go on. Frankel believes that a settlement in this case could break loose over $12 billion in Countrywide repurchases demanded by Fannie Mae and Freddie Mac, and volume like that could make a difference for BofA, especially if they are found liable for Countrywide’s breaches of representations and warranties. But that’s a ways off, and it’s not clear how many of those outstanding repurchases fall under “The Hustle” program.

So to me, this again shows the reluctance of law enforcement to actually hold executives who committed fraud personally accountable for fraud. And it takes a whistleblower with iron-clad information to actually get them to act at all.