Fair Game: Promises, Promises at the New York Fed
Promises, Promises at the New York Fed
TWO weeks ago, I wrote a column about a secret agreement struck in July 2012 by the Federal Reserve Bank of New York and Bank of America. The existence of the confidential deal was disclosed recently in court filings, which showed the New York Fed releasing Bank of America from all fraud claims on mortgage securities the Fed had bought as part of the government’s rescue of the American International Group in 2008.
A.I.G., which is suing Bank of America to recover losses it suffered on those securities, has calculated the value of the fraud claims at $7 billion.
Late on Thursday, a copy of the actual agreement came to light. It was filed by Bank of America in a California court that is hearing the matter of who owns those fraud claims — A.I.G. or the New York Fed. The agreement was also filed by the New York Fed in a related lawsuit in the Southern District of New York, where the New York Fed asked that the court keep the agreement under seal.
A reading of the document makes it clear why.