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FDIC Voices Concerns Over BAC Settlement

*_Update: Bank of America spokesperson responded to an e-mail from_ MReport.*

The ""FDIC"":http://www.fdic.gov/ stepped in late Monday to halt the mega $8.5-billion ""Bank of America"":https://www.bankofamerica.com/ deal over mortgage-backed securities, according to multiple news outlets. The federal agency, an erstwhile bank regulator, filed its concerns in a U.S. District in New York as an investor with claims to securities at stake in the settlement.

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The ""_Wall Street Journal_"":http://online.wsj.com/article/BT-CO-20110829-712041.html quoted a filing by the FDIC, in which the agency said ""[t]he reason for the FDIC's objection is that it does not have enough information to evaluate the Settlement.""

├â┬ó├óÔÇÜ┬¼├àÔÇ£We believe that the trustee acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval,"" Lawrence Grayson, a Bank of America spokesperson, tells _MReport_.

According to ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-08-29/fdic-objects-to-bank-of-america-s-proposed-8-5-billion-mortgage-bond-pact.html, the FDIC is in possession of securities addressed under settlement terms and conditions, which a group of investors negotiated as the $8.5-billion deal moved forward.

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A state judge in New York will preside over the decision to green-light the settlement come November, even as an investor group persists in trying to kick the case up to a federal court, according to _Bloomberg_.

In speaking with _MReport_ Monday, separate spokespeople for neither the FDIC nor Bank of America offered commentary about the filing.

Scott Silverstri, another Bank of America spokesperson, did not immediately respond to an e-mail from _MReport_.

According to the _Journal_, the move by the federal agency adds to several other attempted interventions by investors.

In August, American International Group Inc. filed suit with the mortgage giant over $10 billion in losses, seeking to also grind the $8.5-billion settlement to a halt.

Commenting on the highly anticipated deal in a past story with the ""_New York Times_"":http://www.nytimes.com/2011/06/29/business/29mortgage.html, Michael Mayo, a bank analyst with New York-based ""Credit Agricole"":http://www.credit-agricole.com/, said he felt the $8.5-billion securities deal ""is huge. It's about time the industry resolves issues from the financial crisis and focuses more on righting their companies and improving the economy. This is the most significant step since the financial crisis that helps do that.""

The _Times_ divulged that the settlement reached by Bank of America with investors proposes to cover some $424 billion in mortgage-related losses stemming from Countrywide, which it absorbed in an acquisition following the financial crisis.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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