NEW YORK ( TheStreet) -- Bank of America (BAC) 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), BlackRock (BLK) 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), 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
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV