Dan Freed, The Street
Bank of America CFO Bruce Thompson faced questions from investors this week over a recent ruling that some believe may persuade a judge to reject an $8.5 billion settlement the bank reached with 22 institutional investors over mortgage backed securities liability.
The settlement, reached in 2011, covers $108 billion in mortgage backed securities (MBS). The investors argue that the underlying mortgage loans didn’t live up to their original billing. Even though several of the world’s largest financial institutions signed on to the deal, including Goldman Sachs (GS_), PIMCO, BlackRock (BLK_)and the Federal Reserve Bank of New York, many others, including AIG have objected.
The State Attorneys General of New York and Delaware and three Federal Home Loan banks have also opposed the deal. New York State Supreme Court Judge Barbara Kapnick is hearing the case.