BofA $8.5 billion deal to go forward; AIG loses bid to delay
By Karen Freifeld
NEW YORK (Reuters) - A New York state judge declined to delay court approval of Bank of America Corp's (BAC.N: Quote) $8.5 billion settlement with investors in mortgage-backed securities, rejecting a move by American International Group Inc (AIG.N: Quote).
At a hearing on Wednesday, Justice Saliann Scarpulla of New York State Supreme Court ordered the judgment by her predecessor in the case, Barbara Kapnick, to be officially recorded.
"It's very straightforward," Scarpulla told lawyers for AIG, which was one of the investors in the mortgage securities. "Judge Kapnick issued the order. ... If you don't like it, your remedy is to appeal."
Kapnick approved the settlement on January 31, her last day overseeing the case before she was elevated to a state appeals court, and ordered a five-day delay before her approval was officially recorded. AIG on February 4 asked Scarpulla, the new judge on the case, to delay recording of the judgment, saying Kapnick had left some matters unresolved.
"Judge Kapnick told me the five-day stay she put in was merely a convenience to the parties," Scarpulla said on Wednesday. "She had no intention of leaving anything open."
AIG said in a statement it will appeal Kapnick's decision if necessary.
Bank of America agreed to the settlement in June 2011 to resolve claims by investors who bought mortgage-backed securities issued by Countrywide Financial before the U.S. housing crisis. The investors said Countrywide, acquired by Bank of America in 2008, misrepresented the quality of the underlying home mortgages, which went sour in the crisis.
Twenty-two institutional investors, including BlackRock Inc (BLK.N: Quote), Allianz SE's Pimco (ALVG.DE: Quote) and Metlife Inc (MET.N: Quote), signed on to the settlement. AIG opposed the deal, saying there was no evidence it provided adequate compensation for losses. Continued...