Witness lifts veil on BofA settlement negotiations
By Karen Freifeld
NEW YORK (Reuters) - Mortgage bond investors got "the best deal that was available" when they agreed to an $8.5 billion settlement with Bank of America Corp (BAC.N: Quote) in 2012, an executive who helped negotiate the deal said Thursday.
The proposed deal would compensate investors who bought mortgage bonds issued by Countrywide Financial Inc, a unit of Bank of America, after the bonds went bad in the financial crisis.
Justice Barbara Kapnick is presiding over a hearing, which began in state court in New York this week, to decide whether to approve the deal.
While bolstering the case that the deal should be approved, Tuesday's testimony from Pacific Investment Management Co's (Pimco) Kent Smith provided a window into a difficult period for Bank of America, whose shares fell sharply after it rescued Countrywide in 2008.
Smith, Executive Vice President at Pimco and a member of the committee that negotiated the deal, said it was in the best interests of the investors and rejected the notion that the committee capitulated.
"It's an outstanding deal," Smith said. "I don't feel it was the bondholder group that caved. Bank of America did."
Smith also dismissed a suggestion made on Tuesday by a lawyer for investors who object to the deal, who said the committee agreed to a low number in part because BlackRock, one of the committee members, has a relationship with Bank of America.