NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) is somewhere between $16 and $22 billion short on its reserves for mortgage backed securities (MBS) litigation, according to legal and accounting experts hosted on a recent conference call by CLSA analyst Mike Mayo.
At issue is a proposed $8.5 billion settlement between the bank and 22 institutions, including Goldman Sachs (GS - Get Report), BlackRock (BLK - Get Report) and PIMCO over claims on $108 billion in mortgage backed securities. The eight-cents-on-the-dollar deal faces objections from AIG (AIG), three Federal Home Loan Banks and States Attorneys General of New York and Delaware.
The $8.5 billion figure is the work of RRMS, a three-person consulting firm in Midtown Manhattan, hired by Bank of New York Mellon (BK - Get Report), the trustee that is supposed to be responsible for protecting the interests of bondholders.
According to a transcript of the call hosted by Mayo, the analyst said he was "shocked that such a small firm with such a short time in existence in an out-of-the-way area (Diamond District in NYC) would be responsible for deriving such an important number."Mayo added that the office is "in the part of town where pre-Giuliani