American International Group Inc. pursued a lawsuit accusing Bank of America Corp.'s Countrywide unit of causing billions of dollars of losses by fraudulently inducing it to buy risky residential mortgage-backed securities. Pfaelzer dismissed AIG claims related to alleged oral misstatements and negligent misrepresentations. She also allowed AIG to submit an amended complaint. The case is part of overlapping litigation begun in 2011, when AIG sued Bank of America for $10 billion over activities it said helped trigger its near collapse in 2008 and subsequent $182.3 billion federal bailout. Bank of America has paid more than $40 billion to settle legal, regulatory and borrower disputes tied to its purchases of Countrywide Financial Corp. in July 2008 and Merrill Lynch & Co six months later.

Bank of America Corp. has agreed to pay MBIA Inc. $1.6 billion in the five-year dispute over who is responsible for losses related to soured mortgage-backed securities. BAC will also provide the bond insurer a credit line of $500 million and take an approximate 5% stake in MBIA's holding company. MBIA filed the lawsuit in September 2008, claiming Countrywide fraudulently induced it to insure the securitizations by misrepresenting characteristics of the underlying loans.

MBIA Inc. together with its subsidiaries MBIA Insurance Corp. and National Public Finance Guarantee Corp., agreed to the terms of a comprehensive settlement agreement and related agreements with Bank of America Corp. Bank of America Corp. and certain of its subsidiaries, under the terms of the settlement agreement, MBIA Corp. will receive a net payment of about $1.7 billion, consisting of about $1.6 billion in cash and $137 million principal amount of MBIA Inc.'s 5.70% Senior Notes due 2034. In exchange for the $1.7 billion net payment, MBIA Corp. will dismiss the litigation commenced in September 2008 against Countrywide Home Loans Inc., among other parties, and later amended to include claims against Bank of America, relating to breaches of representations and warranties on certain MBIA-insured securitizations sponsored by Countrywide. Bank of America and MBIA have also agreed to the commutation of all of the MBIA Corp. policies held by Bank of America, which have a notional insured amount of about $7.4 billion, and of which $6.1 billion are policies insuring credit default swaps held by Bank of America referencing commercial real estate exposures. MBIA Corp. will have no further payment obligations under the commuted policies. The settlement agreement requires certain approvals of the New York State Department of Financial Services, which are expected to be received shortly, at which point the parties will execute the agreements and promptly close all contemplated Under the terms of the settlement agreement, Bank of America will receive five-year warrants to purchase 9.94 million shares of MBIA common stock at a price of $9.59 per share. Bank of America also agreed to dismiss its claims in the pending litigation concerning the restructuring transactions announced by MBIA on February 18, 2009 and the pending litigation between the parties concerning the senior debt consent solicitation completed by MBIA in the fourth quarter of 2012.