The Federal Deposit Insurance Corp. urged a U.S. judge to reject a proposed $500 million class-action settlement between Bank of America Corp.’s Countrywide unit and investors in devalued mortgage-backed securities, Bloomberg News reported yesterday. The FDIC, as receiver for 19 failed banks that owned the Countrywide securities, said in a court filing yesterday that the proposed settlement sets aside only $41 million for the claims of 91 percent of the investors in the securities while the lawyers for the lead plaintiffs will receive $85 million. The lead plaintiffs and their lawyers can only represent a “tiny minority” of the investors because of a series of rulings by U.S. District Judge Mariana Pfaelzer in 2011 in the federal securities class-action. The judge said that only the claims for securities that were purchased by investors who filed the very first lawsuits could proceed under federal securities law.
