NEW YORK (Legal Newsline) - A New York judge on Wednesday granted Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden's motions to intervene in litigation over a proposed $8.5 billion settlement between Bank of America and Bank of New York Mellon Corp.
In April, Schneiderman and Biden asked New York State Justice Barbara Kapnick, who is overseeing the case, to allow their offices to intervene.
Schneiderman, in particular, argued that there are "serious questions" about the proposed deal.
"The proposed cash payment represents only a tiny percentage of the losses investors have faced and will continue to face," the attorney general wrote in his motion.
The settlement covers more than 500 troubled mortgage pools issued by Countrywide Financial. Bank of America bought Countrywide in 2008.
"It is clear that the AGs are not seeking 'only monetary relief that would inure to the benefit' of private parties," Kapnick wrote in her 13-page memorandum decision.
"Accordingly, the AGs have identified legitimate quasi-sovereign interests at play in this proceeding."
The court, she noted, was not persuaded by arguments made in opposition to the AGs' motions that their investigation would somehow be the source of "undue delay or burden."
Kapnick wrote that "there has been no indication of that so far."
Schneiderman spokesman James Freedland on Thursday called the ruling an "important victory" for the attorney general in protecting the integrity of the state's global financial markets and providing meaningful relief to those who have suffered from the mortgage crisis.
"Attorney General Schneiderman's goal in joining in this action is to make sure that those who had no voice in the negotiation of this settlement are treated fairly, and this ruling makes that possible," Freedland said in a statement.
Biden's office, meanwhile, had no immediate comment on Kapnick's decision.
In August 2011, Schneiderman filed a lawsuit against Bank of New York in New York State Supreme Court, accusing the bank of fraud in its role as a trustee overseeing the pools for investors.
The attorney general alleged that the bank misled and breached its duties to investors, and should be forced to pay penalties and restitution.
In letters to more than a dozen investment firms involved in the deal, Schneiderman said he was concerned the settlement was made without the full participation of those affected investors.
As part of his April filing, the attorney general removed the claims it filed against the bank last year.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.