By Jonathan Spicer
NEW YORK, March 1 The Federal Reserve Bank of
New York this week made public details of a settlement it
reached with Bank of America that could bolster the
BofA's case in a lawsuit with American International Group Inc
over mortgage-securities claims.
AIG's $10 billion lawsuit against Bank of America is aimed
at recouping losses from the U.S. lender. AIG claims it has the
right to recoup these losses and did not transfer them when it
transferred $18 billion in litigation claims to the U.S. Federal
Reserve in relation to the Fed's bailout of the insurer.
The settlement the New York Fed submitted on Thursday to a
Los Angeles court shows that when the Fed agreed to purchase
troubled assets from AIG, it understood that it was acquiring
all "right, title and interest" in them. That included
litigation claims associated with those securities or their
acquisition by AIG, according to the settlement.
The details from the settlement between the Fed and BofA
could undermine AIG's assertion in its lawsuit filed Jan. 11
that it did not transfer litigation claims to the Fed, including
more than $7 billion in the Bank of America case.
Under the settlement between the Fed and Bank of America,
BofA agreed to pay the New York Fed some $62 million in
settlements, including $43 million related to the residential
A Los Angeles court will ultimately have to decide who owns