On May 8, Judge Jed Rakoff of the United States District Court for the Southern District of New York dismissed claims by the United States for damages and civil penalties under the False Claims Act against Countrywide and Bank of America.  The court held that the government could proceed with its claims for violations of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989.  FIRREA permits the government to recover civil penalties for fraudulent activities that “affect” federally insured financial institutions.  The government alleged that Countrywide’s mortgage origination business had defrauded Fannie Mae and Freddie Mac.  The court noted it would explain its reasoning at a later date.  Order.  Amended Complaint.