WASHINGTON (10/9/13)--The Federal Deposit Insurance Corp. this week objected to a $500 million April settlement between Bank of America and several class action plaintiffs.
The objection was filed in California state court.
The suit involves Bank of America subsidiary Countrywide Mortgage's sale of mortgage-backed securities in the days before the financial crisis. A number of pension funds were among those that brought or later joined in the lawsuit against the bank.
According to Bloomberg News, the FDIC said the proposed settlement was not enough. The $500 million total only represents about 0.11% of the face value of the securities it covers, the FDIC said. In similar cases, plaintiffs have received 1.1% of the value of the securities in question, Bloomberg noted. In its objection, the FDIC also said the plaintiffs that accepted the settlement had a conflict of interest: Lawyers and main plaintiffs in the settlement would receive substantially more than other minor plaintiffs in the class action suit.
Bank of America did not comment on the FDIC objection.
A hearing on the settlement has been scheduled for Oct. 28. The settlement could be approved at that time.