FDIC attempts to block BofA's $8.5 billion MBS investor settlement
The Federal Deposit Insurance Corp. threw Bank of America (BAC) another challenge Monday when it filed a motion to intervene in the banking giant's proposed $8.5 billion mortgage-backed securities settlement with The Bank of New York Mellon. The FDIC described itself in the motion as "the receiver of numerous banks and owner of many certificates issued by many of the trusts that would be covered by the proposed settlement." The FDIC said its objecting to the settlement because it "does not have enough information" to evaluate the proposal. The FDIC is not the first to object to the deal. Walnut Place -- a group that represents investors in Countrywide MBS -- filed suit in court on behalf of investors to prevent the settlement. In response to the filing, Bank of America (BAC) spokesperson Lawrence Grayson said, "We believe that the trustee acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval.” The deal was struck originally between The Bank of New York Mellon -- a trustee holding investors MBS investments -- and Bank of America. The deal was supposed to end a dispute over Countrywide's sale of toxic loans, which were later securitized and sold to investors. But investors, who were not involved in the settlement, pushed back in the Walnut Place suit, fearing the settlement may be unfair and a barrier to seeking just compensation. Write to: Kerri Panchuk.