Bank of New York Mellon Corp. (BK) asked a judge to reject a bid by New York Attorney General Eric Schneiderman to intervene in a proposed $8.5 billion mortgage- bond settlement involving Bank of America Corp. (BAC)
Schneiderman this month asked the New York state-court judge overseeing the case to reject the deal, calling it unfair to investors. Bank of New York, the trustee for the mortgage- securitization trusts covered by the settlement, violated New York law, Schneiderman said.
The settlement 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. Bank of New York, along with 22 institutional investors, claim Schneiderman has no standing to intervene in the case.
“The current settlement process allows for all investors -- supporters and objectors -- to make their case before the court, including those with even the smallest economic interests,” Kevin Heine, a Bank of New York spokesman, said in an e-mailed statement.
The attorney general’s claims about whether Bank of New York acted in good faith “would hijack what should be an expedited proceeding,” the bank said. Those claims could take years to resolve, the bank said.
“No intervenor has demonstrated that the trustee was presented with -- or could have achieved -- a better outcome than the settlement the trustee obtained,” the investors said. “That is precisely why all 22 of institutional investors chose to support it.”
The bank, and the institutional investors, said the proposed settlement proceeding isn’t the appropriate forum to address the attorney general’s claims.
“Given that those who stand to be significantly affected include New York State investors and pensioners, as well as distressed homeowners residing throughout the state and country, the state of New York has a broad and crucial interest in these proceedings,” Danny Kanner, a Schneiderman spokesman, said in an e-mailed statement responding to the opposition to his motion to intervene.
The case is In the matter of Bank of New York Mellon, 651786/2011, New York State Supreme Court, New York County (Manhattan).