American International Group Inc (AIG), Bank of America Corp (BAC): What’s The Real Battle?

Elsewhere — AIG: 2 BAC: 1.5
AIG is also stepping up against Bank of America Corp (NYSE:BAC) in another case. Leading a pack of investors, AIG filed paperwork with the courts handling the hearings scheduled for later in the month that will determine if the bank’s agreed-upon $8.5 billion settlement over mortgage-backed securities will be approved. Stating that the settlement was unreasonable and too small, AIG is taking a firm stance against the approval.

Unfortunately for AIG, other interested parties are moving in the opposite direction. Both the State of New York and Delaware have removed their objections to the settlement. This happened just a day after the FHFA, which manages Freddie Mac and Fannie Mae, dropped its objection as well.

A real battle?
As the new rulings come in, this story will continue with both businesses taking hits in the market if decisions don’t go their way. As we’ve seen with the B of A-MBIA settlement, investors like the idea of the bank putting these old issues behind it. And as investors return to AIG, it’s a great move for the company to continue to seek damages for the losses it sustained from allegedly misrepresented securities. Investors should keep an eye on how this story develops, with the ultimate win likely to make a big splash in the market.

Fool contributor Jessica Alling has no position in any stocks mentioned — you can contact her here. The Motley Fool recommends American International Group (NYSE:AIG). The Motley Fool owns shares of American International Group and Bank of America and has the following options: Long Jan 2014 $25 Calls on American International Group.

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