Delaware Department of Justice
Attorney General
Kathy Jennings

Biden Objects to Proposed Mortgage Securities Settlement

Del. Attorney General seeks more information over concerns about potential violations of Delaware law and inadequate response to investors

Wilmington – Delaware Attorney General Beau Biden announced today that his office is objecting to the proposed settlement between Bank of America and Bank of New York Mellon and has petitioned the New York Supreme Court for permission to intervene in its review of the $8.5 billion settlement currently being contemplated.

“I am intervening to enforce our laws and to protect Delaware investors who may have been harmed by these toxic securities,” Biden said. “Intervening in this settlement puts us in position to ensure that the banks are playing by the rules.”

In a motion filed in the New York Supreme Court today, Biden’s office argued that it needs to intervene in order to ensure that the interests of Delaware investors are represented in any settlement, preserve its ability to pursue legal action under Delaware law arising out of the conduct covered by the proposed settlement, and ensure that any Delaware trusts covered by the proposed settlement followed Delaware law in the sale of the securities. 

The settlement, which the banks agreed to in June, is designed to resolve claims that Countrywide Financial, now owned by Bank of America, defrauded investors by misrepresenting toxic loans that were bundled together and sold to investors. The Countrywide loans were packaged into mortgage-backed securities and sold to hundreds of trusts that were administered by Bank of New York Mellon. Investors in those trusts have alleged that Bank of New York Mellon did not adequately verify the quality of the loans that comprised the mortgage-backed securities, which totaled billions of dollars.  At least two of the 530 trusts covered by the proposed settlement are incorporated in Delaware and are governed by Delaware law. The proposed settlement was agreed to without the input of many of the investors.

Copies of the motion are available upon request.

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