NEW YORK (Jonathan Stempel) – A group of bondholders plans to challenge Bank of America Corp’s $8.5 billion settlement with holders in soured mortgage-backed securities, saying it may be unfair to other bond investors.
In court papers filed on Tuesday in New York State Supreme Court in Manhattan, 11 companies sharing the name Walnut Place said they had “serious concerns about the secret, non-adversarial, and conflicted way in which the proposed settlement was negotiated and about the fairness of the terms.”
Bank of America on June 29 announced the settlement with 22 institutional investors including BlackRock Inc, MetLife Inc, Allianz SE’s Pacific Investment Management Co and the Federal Reserve Bank of New York.
That accord was part of $20 billion of mortgage-related charges that the bank said it would take, hoping to resolve much of the liability from its $2.5 billion purchase in 2008 of mortgage lender Countrywide Financial Corp.
But Walnut Place called the settlement “inadequate.” It said it plans on July 13 to ask Justice Barbara Kapnick, whose approval is required for the settlement, to excuse it from the accord, or else to compel greater disclosures about the pact.
Walnut Place had in February sued Bank of America, seeking to force it to buy back loans underlying more than $1.06 billion of securities it owns, alleging misrepresentations by Countrywide.
‘It is disingenuous to accuse everyone who calls for restructuring as trying to break up the county. History tells us that that kind of cheap blackmail will not work as long as the underlying reasons for the agitations persist.’
‘The biggest challenge seems to be that we seem to be allowing moderate voices on this issue to be drowned out by the reckless utterances of a few rabble rousers on all sides who may be tools in the hands of those who do not wish this country well. These are some of the people who arrogate to themselves the toga of spokespersons of our diverse groups.’
-Ex VP Atiku Abubakar on Restructuring.
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