A group of public pension funds, claiming Bank of America Corp.'s proposed $8.5 billion mortgage-bond settlement could give some investors a windfall, said it had “serious questions” about the fairness of the deal.
The public funds that asked to intervene in the case include the $3.29 billion Chicago Policemen's Annuity & Benefit Fund and the $690 million Grand Rapids City (Mich.) General, Police and Fire Retirement System. They didn't state the size of their investments in Countrywide mortgage-backed securities.
“Public pension funds purchased billions of dollars of Countrywide mortgage-backed securities,” David Scott, a lawyer for the funds, said Wednesday in a statement. “They need to be given a seat at the table to make sure that the settlement is fair, reasonable and in the best interests of the entire class of investors.”
Bank of America said June 29 that it had agreed to pay $8.5 billion to resolve claims by a group of 22 investors, including BlackRock, which wanted the bank to buy back delinquent home loans packaged into bonds by Countrywide Financial Corp., which Bank of America acquired in 2008.
The pension funds said in a filing Wednesday in New York state court, where the agreement has been submitted for a judge's approval, that their interests may not “be directly aligned” with those of the 22 corporate and hedge fund investors that negotiated the settlement.
Kathy Patrick, a lawyer for the 22 investors, and representatives of Bank of New York Mellon Corp., the trustee for the bonds that asked the New York court to approve the settlement, didn't return calls seeking comment after regular business hours. Shirley Norton, a Bank of America spokeswoman, also didn't immediately return a call seeking comment.