NY, Delaware AGs may intervene in BofA, BNY Mellon MBS settlement
Attorneys general for Delaware and New York secured permission from a U.S. district judge to intervene in court proceedings discussing the Bank of New York Mellon (BK) $8.5 billion settlement with Bank of America (BAC) over toxic mortgage-backed securities. The AGs are eager to get a presence in the proceedings, so they can represent the interests of the investing public in their respective states before a final deal is reached. Admission to the process gives the AGs a chance to hear where talks are going and an opportunity to object to provisions of the deal. The issue surfaced in the first part of the year when BoNY Mellon, as trustee for 530 MBS trusts with a principal balance of $424 billion in Countrywide Financial loans, agreed to settle with BofA over the sale of toxic loans into securities. BofA acquired Countrywide three years ago. New York AG Eric Schneiderman filed a motion in New York court in August to intervene in all legal actions related to the multibillion-dollar settlement. Delaware Attorney General Beau Biden filed a motion to intervene days later. Judge William Pauley III with the United States District Court Southern District of New York granted the AGs motion to intervene in the proceedings, while simultaneously ruling an individual homeowner could not obtain standing to intervene. Judge Pauley held state AG's have standing to intervene in certain legal actions that relate to statutes or regulations within their purview. "Because the settlement agreement at issue here implicates the vitality of the national securities markets, this action concerns far more than the financial interests of a few sophisticated investors. And the intervention of the state AGs in this action will protect the interests of absent investors," Pauley wrote in the court's holding. Write to Kerri Panchuk.