A U.S. District judge in Manhattan has ordered Bank of America to pay a $1.27 billion civil penalty for fraud it committed before and during the time that taxpayers invested $45 billion in the bank through the Troubled Asset Relief Program (TARP) bailout, the special inspector general for TARP said yesterday.

Additionally, former Bank of America executive Rebecca Mairone was ordered to pay a civil penalty of $1 million to the government.

Last October, after a four-week trial and just one day of deliberation, a federal jury in Manhattan found BofA and its predecessors, Countrywide Financial Corp. and Countrywide Home Loans Inc., and Mairone liable for defrauding the United States by selling thousands of defective toxic loans to government-sponsored entities (GSEs) Fannie Mae and Freddie Mac.

Starting in 2007 and continuing as the mortgage crisis worsened up to 2009, BofA developed a program known as the “Hustle” (which stood for “High Speed Swim Lane” or “HSSL”), that focused on generating and selling a high volume of mortgages at high speed to the GSEs. To do so, the bank removed critical quality control checks and fraud prevention measures that could have slowed down the origination process, despite repeated warnings that doing so would yield disastrous results, including defaults on the loans.

Through the Hustle program, BofA originated thousands of poor-quality loans and sold them to the GSEs based on lies that the loans were investment quality and met the GSEs’ requirements, cheating the GSEs of money in the process. As a result, BofA fraudulently added billions of dollars to its bottom line and paid executives bonuses based on the speed and volume of the defective GSE loans they processed.