Bank of America Corp (NYSE:BAC) has rebuffed a request from American International Group Inc (NYSE:AIG) to renegotiate a $85 billion mortgage bond settlement deal.
The bank’s attorney Elaine Golin said Bank of America Corp (NYSE:BAC) won’t participate in mediation proposed by American International Group Inc (NYSE:AIG) and other opponents and will not otherwise engage in any renegotiation.
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Bank of America Acquired Countrywide
The lender paid $2.5 billion to acquire Countrywide Financial Corp in 2008. The acquisition, however, became an albatross and has cost Bank of America Corp (NYSE:BAC) tens of billions of dollars for litigation, mortgage related costs and loan buybacks. Leading investors numbering twenty two, including BlackRock, Inc. (NYSE:BLK), Metlife Inc (NYSE:MET) and the Federal Reserve Bank of New York, have entered into a settlement to resolve the claims in bonds issued by Countywide Financial Corp.
In a law suit filed earlier, AIG alleged that Bank of America Corp (NYSE:BAC) committed fraud by selling $7 billion worth of mortgage backed securities to American International Group Inc (NYSE:AIG) under duress in 2008. BofA challenged AIG’s right to sue by saying that the insurer giant overrode its claim to the securities when it sold them to Federal Reserve.
American International Group Inc (NYSE:AIG) and the Federal Home Loan Banks of Boston, Chicago and Indianapolis, sent a letter to the trustee overseeing the securities, the Bank of New York Mellon Corporation (NYSE:BK), objecting to the settlement.
AIG, the largest of the investors, argued that the trustee didn’t meet its fiduciary duty in protecting the interests of investors when it settled with Bank of America Corp (NYSE:BAC) over two years ago.
On June 14, Justice Barbara Kapnick, who is hearing testimony to decide whether to approve the settlement, had asked the parties to consider mediation rather than wait for her to rule.
In furtherance to the judge’s recommendation, AIG’s attorney reached out to The Bank of New York Mellon Corporation (NYSE:BK)’s attorney stating that the objectors to the deal would like to begin new settlement talks to arrive at an improved settlement.
The case is in the matter of the application of the Bank of New York Mellon, 651786-2011, New York State Supreme Court, New York County (Manhattan).