FDIC concerned about BofA's $8.5-bn on mortgage settlement with investors
02 Sep 2011
Bank of America's (BofA's) proposed $8.5-billion mortgage-bond settlement with some investors has run into yet another problem, with the Federal Deposit Insurance Corp (FDIC), the receiver for failed banks, filing an objection in a federal court.
"This filing is simply a formal notice to preserve our right to make claims as a part of the settlement and seeks additional information to evaluate those potential claims," an FDIC spokesman claimed. "It is not an evaluation or opinion on the settlement itself."
In June, Bank of America, America's largest bank by assets and deposits agreed to pay $8.5 billion to leading investors in mortgage-backed securities issued by its unit, Countrywide Financial Corp.
The settlement, negotiated with a group of institutional investors including BlackRock Inc and Pacific Investment management Co, has to be endorsed by a court.
"We believe that the trustee acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval," said Lawrence Grayson, a Bank of America spokesman, reacting to criticism from other investors.
But several other investors, who would be bound by the agreement, want to intervene in the settlement. They include American International Group Inc (AIG), which has sued Bank of America to recover more than $10 billion it lost on mortgage investments.
