An expert witness testified Thursday that a proposed $8.5bn payout to settle litigation over Bank of America’s sale of shoddy mortgage bonds is “not reasonable.”
Adam Levitin, a Georgetown University law professor, said the deal wasn’t fair to bondholders, according to a Reuters report. Bank of America agreed to the settlement in June of 2011 to settle claims about bad mortgage-backed securities sold by Countrywide Financial Corp. – which Bank of America bought in 2008 – during the lead-up to the financial meltdown.
But opponents of the settlement say that the trustee overseeing the securities, Bank of New York Mellon, placed its interest over those of bondholders by agreeing to the settlement, Reuters reported.
“My opinion is the settlement was not entered into in good faith,” Levitin testified Thursday. He said Bank of New York Mellon wanted to “curry favor” with Bank of America by agreeing to the settlement because “that’s where it’s going to get its business from,” Reuters reported.
Bank of New York Mellon said that accusations of a conflict of interest are “false and irrelevant,” and that the settlement was reasonable, according to Reuters.