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June 28, 2013

Bank of America Rejected AIG's Request to Revise Pact

“Bank of America Corp. spurned a request from American International Group Inc. to renegotiate an $8.5 billion deal over soured mortgage-backed securities after a judge suggested mediation, according to a court filing by AIG.

New York state Judge Barbara Kapnick said in a June 14 private meeting, according to a letter filed with the court by AIG, that the parties should consider mediation as a way to solve a long-running dispute over the fairness of a 2011 pact between Bank of America and a trustee for investors who suffered losses on debt securities originally valued at $105 billion.

Justice Kapnick is overseeing a special proceeding over the settlement. A small group of investors, including AIG, is arguing that the judge shouldn’t approve the deal because the sum is inadequate and the negotiation process was conflicted.

An attorney for Bank of America declined to participate in any new discussions with AIG or other investors who say the settlement is insufficient, according to a letter filed with the court. The $8.5 billion deal, the bank’s attorney argued in the letter, “reflects the result of lengthy, hard and arms-length negotiation. It does not permit any of the economic terms to be renegotiated.”

Bank of America won’t negotiate because it is confident the judge will approve the settlement, said a person familiar with the matter.”

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Read full Wall Street Journal article here

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