In AIG suit, NY Fed reveals details of crisis-era BofA settlement
NEW YORK (Reuters) - The Federal Reserve Bank of New York this week made public its crisis-era settlement with Bank of America (BAC.N) in order to bolster its case against American International Group Inc (AIG.N) over mortgage-securities claims.
On Thursday, the New York Fed submitted to a Los Angeles federal court the settlement in which its Maiden Lane II unit said it intended to receive all litigation claims associated with securities it acquired when it bailed out insurer AIG in late 2008.
The settlement showed that Bank of America agreed to pay the New York Fed unit $43 million related to some of the residential mortgage securities.
The ongoing dispute, however, involves far larger amounts. It concerns whether AIG transferred $18 billion of litigation claims to Maiden Lane II, which the New York Fed created in December 2008 to buy the securities from the giant U.S. insurer.
Earlier this week, a federal judge in New York put AIG's dispute with the New York Fed on hold while the Los Angeles court addresses the insurer's separate $10 billion lawsuit against Bank of America.
AIG is trying to recoup losses from the bank. On January 11, it sued for a court declaration that it had not transferred those claims to Maiden Lane, including more than $7 billion in the Bank of America case.
The New York Fed rejects AIG's claim. The settlement it submitted on Thursday showed that when it agreed to purchase the troubled assets from Bank of America, it understood that it was acquiring all "right, title and interest" in them.
"Maiden Lane's intent was to receive all transferable and assignable benefits associated with the securities and related instruments, including litigation claims associated with those securities or their acquisition by AIG," the settlement said.
(Reporting by Jonathan Spicer; Editing by Dan Grebler)
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