Bank of America $8.5 billion settlement a 'win' for investors, lawyer says

Mon Nov 18, 2013 6:51pm EST
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By Karen Freifeld

NEW YORK (Reuters) - A lawyer for an investor group on Monday urged a judge to approve Bank of America Corp's proposed $8.5 billion settlement over mortgage-backed securities that soured in the financial crisis, noting that not one investor testified against the deal in a nine-week proceeding.

Kathy Patrick, a lawyer for a group of institutional investors who entered into the settlement, was summing up the case in New York state court in Manhattan.

Bank of America agreed to the settlement in June 2011 to resolve claims over shoddy mortgage-backed securities issued by Countrywide Financial Corp, which the bank acquired in 2008.

Twenty-two institutional investors, including BlackRock Inc, MetLife Inc and Allianz SE's Pacific Investment Management Co, signed onto the accord.

Opponents of the settlement, whose numbers have dwindled, are led by American International Group Inc.

Justice Barbara Kapnick of New York State Supreme Court must decide whether to approve the deal, which would be binding on all investors. It is unclear when she will rule.

In court on Monday, Patrick pointed out that, after nine weeks of testimony, no investor had taken the stand and asked the judge not to approve the settlement.

"How could you possibly reject this settlement as unreasonable when not one of the investors has testified that it is," Patrick, a partner with Houston-based Gibbs & Bruns, implored the judge.   Continued...

A man walks next to a Bank of America's branch in New York October 24, 2012. REUTERS/Eduardo Munoz