An appeals court dealt the Obama administration a major setback in its efforts to levy tough fines on corporations and executives, overturning a civil mortgage-fraud case against Bank of America Corp. tied to the financial crisis.

The court on Monday also tossed out a $1 million civil penalty against Rebecca Mairone, a former executive at Countrywide Financial Corp., who was one of the few individuals fined for alleged misdeeds during the crisis.

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