A US government agency has objected to Bank of America's $8.5 billion settlement for losses on mortgage-backed securities, imperiling the bank's efforts to move beyond the subprime mess. The Federal Deposit Insurance Corporation, which insures bank deposits and plays a major role in regulating the US banking sector, filed its objection late Monday in a New York court, according to a court filing.
"The reason for the FDIC's objection is that it does not have enough information to evaluate the settlement," it said in the filing. Stock in Bank of America, the largest US bank in terms of deposits, was down 2.6 percent in mid-morning trading after news emerged of the FDIC action.
The banking giant has been struggling to shepherd the settlement through the courts, in a bid to resolve questions about its liability for failed deals involving subprime mortgages that contributed to the 2008 financial crisis. Since Bank of America announced the settlement in June, private investors who were left out of the settlement talks as well as New York's state attorney general have filed objections to it.