Posted on 12/14/2010 12:52:09 PM PST by longtermmemmory
U.S. Bankruptcy Judge James Peck said Bank of America violated federal law when it "brazenly" seized the deposits after having taken advantage of Lehman's weakened condition in the summer of 2008 in obtaining the money.
"It is difficult to understand how Bank of America could have thought that taking the money was the right thing to do without first seeking permission from the court," Peck wrote in a Tuesday opinion filed in Manhattan bankruptcy court.
"The actions taken were surprising and, quite frankly, disappointing for a leading financial institution that should care a great deal about its reputation," he wrote.
The decision is a victory for Lehman as it tries to repay creditors still owed hundreds of billions of dollars following its September 15, 2008 bankruptcy.
Peck directed Lehman to draft an order calling for the return of the $500 million plus interest, and for the parties to meet to discuss "the amount of any further monetary award."
"We are disappointed with the court's decision, and we continue to believe that our actions were fully supported by well established New York law and the unambiguous language of the bankruptcy code," said Bank of America spokeswoman Shirley Norton. "We are considering our appellate options."
Martha Solinger, Lehman's co-general counsel, said the company is gratified by and fully agrees with the ruling.
Lehman is also seeking to recover $8.6 billion it said JPMorgan Chase & Co extracted just before the bankruptcy, and an $11 billion "windfall" that Barclays Plc got in acquiring a U.S. brokerage unit. Peck handles those cases as well.
ULTIMATUM
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The judge said Bank of America gave Lehman an "ultimatum" that resulted in creation on August 25, 2008 of an account in which Lehman posted the $500 million as security.
(Excerpt) Read more at reuters.com ...
They worked together on it.
I prefer to do business with smaller regional banks. They provide a better level of service.
Actually some of the bad stuff really got started when the insurance companies went into business with the brokerage houses to make mutual funds have cash values. That sure got the ball rolling.
BofA didn’t not want ML or to be a part of TARP. They were threatened by the government with ruin if they didn’t play along.
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BofA is bankrupt and requires the governments continued assistance to keep the doors open (FNM & FRE playing along that the debts are really secured and not wild instruments) ,, BofA has $120B OR MORE in bad mortgage backed debt just from their CW purchase that they will be forced to buy back from the true lenders. To say they don’t want the gov’ts help MAY be true but it misses the point that they don’t have a choice in the matter.
Not relevant, even if true. They should have stood up to the illegal pressure both for ethical reasons and for business reasons.
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