Financial services major Bank of America Corp. (BAC) is said to have rejected a request from insurer American International Group, Inc. (AIG) and other investors to renegotiate the $8.5 billion settlement deal that was struck in July 2011 over soured mortgage-backed securities. This was reportedly revealed by AIG in a court filing.
The request from AIG came after the New York State Judge Barbara Kapnick suggested that the parties reach a settlement through mediation on the long-running dispute over the fairness of the 2011 settlement. The losses suffered on debt securities by investor's were originally valued at $105 billion.
Bank of America has reportedly declined to further negotiations on the settlement as the deal was struck after hard and extended negotiations. The settlement is still subject to the approval by the Judge. However, Bank of America is reportedly confident that it will be approved even without renegotiations.
A small group of investors, including AIG, are pushing for the renegotiations on the settlement, while a group of another 22 investors, including the Federal Reserve Bank of New York, BlackRock, Inc. (BLK) and MetLife, Inc. (MET), deem the settlement as fair and want it to be approved by the judge at the earliest.
The judge can only approve or reject the settlement deal, but does not have the power to increase or decrease the settlement amount.
The mortgage-backed securities were originally issued Countrywide Financial Corp., which was acquired by Bank of America in 2008. The bank has already said to have spent $45 billion on legal expenses linked to the acquisition.
AIG closed Thursday's regular trading session at $44.48, up $0.86 or 1.97% on a volume of 16.69 million shares, and BAC closed at $13.01, up $0.25 or 1.96% on a volume of 124.62 million shares.
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