By David McLaughlin – Aug 10, 2011 12:01 AM ET
Delaware joined New York in challenging Bank of America Corp. (BAC)’s $8.5 billion settlement with mortgage-bond investors.
Delaware Attorney General Beau Biden said yesterday he opposes the agreement and asked to intervene in the case to protect investors and preserve the state’s ability to pursue legal claims.
“I am intervening to enforce our laws and to protect Delaware investors who may have been harmed by these toxic securities,” Biden said in a statement. “Intervening in this settlement puts us in a position to ensure that the banks are playing by the rules.”
The settlement, which requires court approval, calls for Bank of America to pay $8.5 billion to resolve claims from investors in Countrywide Financial Corp. mortgage bonds. Charlotte, North Carolina-based Bank of America acquired Countrywide in 2008.
New York Attorney General Eric Schneiderman last week asked the New York state judge overseeing the case to reject the settlement, saying it was unfair to investors. Bank of New York Mellon Corp. (BK), the trustee for the mortgage-securitization trusts covered by the settlement, violated New York law, Schneiderman said.
Delaware Law
Biden’s office said in a court filing yesterday that Bank of New York, which reached the agreement on behalf of investors, may have violated Delaware law. There is also evidence the bank negotiated under a conflict of interest, the attorney general’s office said.
“We are confident that we have fulfilled in all respects our responsibilities as trustee,” Kevin Heine, a Bank of New York spokesman, said in a statement. “We believe the proposed settlement is reasonable and in the best interests of the trusts.”
The case is In the matter of Bank of New York Mellon, 651786/2011, New York State Supreme Court, New York County (Manhattan).
To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
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