Judge allows insurer intervention in Bank of America settlement

NEW YORK (Reuters)—A New York state judge has granted the request of dozens of investors that include insurers, pension funds and several Federal Home Loan Banks to intervene in Bank of America Corp.'s proposed $8.5 billion settlement with investors who lost money on mortgage-backed securities.

State Supreme Court Justice Barbara Kapnick granted the request, which was not opposed by the bank or by Bank of New York Mellon Corp., the trustee that negotiated the accord with 22 investors including BlackRock Inc. and Allianz S.E.'s Pacific Investment Management Co.

Some investors have objected to the $8.5 billion payout as being too low, and that the settlement extinguishes claims they might otherwise have against Bank of America. New York Attorney General Eric Schneiderman also has expressed opposition.

Bank of New York Mellon has contended that the settlement is fair. Bank of America hopes the accord will address many of its remaining liabilities from its 2008 purchase of mortgage lender Countrywide Financial Corp.

Justice Kapnick has scheduled a Nov. 17 hearing on the proposed settlement.