Large investors involved in the law suit against Bank of America’s Countrywide Financial Corporation are pulling out of the process as the approval date for the $624 million settlement approaches[1]. Believing that they can “get a better deal by going it alone,” investors like the California Public Employees Retirement System are rejecting the settlement as too small[2]. Oregon’s attorney general, John Kroger, stated in reference to the $624 million settlement that the state would net less than $500,000 in damages when it suffered $14 million in losses. “Oregon will not accept pennies on the dollar when Wall Street defrauds Oregonians,” Kroger said[3].

As more investors withdraw, the settlement number is shrinking along with the lawsuit. The current agreement is now down to $601.5 million. Although the settlement could be retracted thanks to opt-outs, BofA and the Countrywide division have decided to keep the settlement alive, calling the situation “unfortunate” and expressing regret that “some investors have not wanted to embrace a fair and equitable agreement.” Plaintiff’s lawyers, who have knocked about $1 million off their fees, also have stated that they believe the settlement is a “really excellent deal,” but understand that some investors will prefer to “take a different kind of risk” in order to have a chance at recouping more losses.

Do you think that the BofA/Countrywide settlement numbers are fair?

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[1] http://blog.riskmetrics.com/slw/2011/02/some-investors-flee-624-million-countrywide-financial-settlement.html

[2] http://blogs.wsj.com/law/2011/02/22/countrywide-deal-too-thin-for-some-investors/

[3] http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202482515549