Monday, May 4, 2015Monday, May 4, 2015

US judge approves $11b Bank of America settlement

Published on Feb 2, 2014 12:13 AM

WASHINGTON (AFP) - A judge in the United States has approved an US$8.5 billion (S$10.8 billion) settlement between Bank of America and a group of investors for losses on dodgy mortgage-backed securities whose collapse triggered the 2008 financial crisis.

Justice Barbara Kapnick of the New York State Supreme Court green-lighted the 2011 accord on Friday, rejecting demands to void it by some investors, including insurer AIG, who called it inadequate and alleged conflicts of interest, according to the decision seen by AFP.

Judge Kapnick said the Bank of New York Mellon, representing the defrauded investors, "did not abuse its discretion in entering into the settlement agreement and did not act in bad faith or outside the bounds of reasonable judgment" in negotiating the deal with Bank of America.

Hoping to put its disastrous 2008 purchase of mortgage lender Countrywide Financial behind it, Bank of America said in June 2011 it would pay US$8.5 billion to a group of large private investment groups that invested in securities that held poorly documented or substandard home loans from Countrywide.

Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!