American International Group (AIG) plans to sue Bank of America along with a host of other prominent financial institutions as the insurer seeks to recover losses on MBS, according to a report in The New York Times.The newspaper, quoting sources with knowledge of the pending action, says AIG hopes to recover more than $10 billion in losses on some $28 billion in investments, claiming the bank along with its Merrill Lynch and Countrywide Financial units misrepresented the quality of mortgages.
AIG is preparing similar claims against Goldman Sachs, JPMorgan Chase, and Deutsche Bank. The lawsuit is expected to be filed early this week in New York State Supreme Court.
BofA spokesman Lawrence Di Rita said the bank's disclosures on the quality of the MBS were adequate for sophisticated investors. Many of the loans lost value because of the housing crisis, he said.
Insurance conglomerate AIG owns a mortgage insurance affiliate, as well as a nonprime lender/servicer.
