Bank of America (BoA) has rejected a request from insurer American International Group, Inc (AIG) to renegotiate the USD 8.5 billion settlement deal that was struck in July 2011, indicating it plans to take its chances that a New York judge will approve the deal.
The settlement request from AIG came after the New York judge suggested on June 14 that the parties reach a settlement through mediation on the long-running dispute over the fairness of the 2011 settlement. The losses suffered on debt securities by investor's were originally valued at USD 105 billion.
The judge can only approve or reject the settlement deal, but does not have the power to increase or decrease the settlement amount.
The mortgage-backed securities were originally issued to Countrywide Financial Corp., which was acquired by Bank of America in 2008. The bank has already said to have spent USD 45 billion on legal expenses linked to the acquisition.