Last Friday marked the day by which Judge Barbara Kapnick pronounced objections to the settlement had to reach her New York City courtroom. According to Reuters, American International Group Inc (NYSE:AIG) and a handful of Federal Home Loan banks are still in opposition. For its part, AIG is declaring the settlement “unreasonably and unjustifiably small.”
AIG is determined get some of its own back
American International Group Inc (NYSE:AIG) is feeling its oats again, and is setting out with vigor to squeeze some reparation from those that assisted with the megainsurer’s downfall. One of those entities is Bank of America Corp (NYSE:BAC), the not-so-proud owner of Countrywide.
Recently, American International Group Inc (NYSE:AIG) won a victory over Bank of America Corp (NYSE:BAC) in another suit over $28 billion of crummy mortgage-backed securities, in which the insurer claims that Countrywide and Merrill Lynch lied about the quality of those instruments.
American International Group Inc (NYSE:AIG) is looking for a $10 billion payday in that case, which a judge just agreed should be heard in state court, as AIG wanted, rather than federal court — which was Bank of America’s preferred venue. Despite promises to Bank of America from the New York Federal Reserve Bank of New York, AIG is not backing off its resolution to get back some of the money it lost.
Similarly, the ongoing skirmish between monoline insurer MBIA Inc. (NYSE:MBI) and B of A is also heating up, despite the fact that the insurer did not win a summary judgment in its suit against the bank, which means the whole mess is headed for trial. This doesn’t translate into a cakewalk for B of A, though. The issue of whether or not the big bank is liable for Countrywide’s prior behavior is still up in the air, while earlier court rulings have stated that Bank of America may be required to repurchase even those loans that are not currently in default.
Regulators drop their opposition
There were a few points of light for Bank of America Corp (NYSE:BAC) in Friday’s news, however. While stopping short of supporting the settlement, the Attorneys General of New York State and Delaware have declared they no longer have objections to the deal. In addition, the Federal Housing Finance Agency also dropped its opposition to the settlement.
While regulators have taken some of the pressure off, others like AIG are clearly willing to go to the mat over this issue. If investors get good news at the Article 77 hearing, expect American International Group Inc (NYSE:AIG) to show Bank of America Corp (NYSE:BAC) no mercy in the coming months on the murky mortgage front.
The article AIG Hammers Bank of America on Murky Mortgages originally appeared on Fool.com and is written by Amanda Alix.
Fool contributor Amanda Alix has no position in any stocks mentioned. 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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