The recently announced settlement between Bank of America and 22 institutional bond investors was initially greeted with great fanfare, as it appeared as though the $8.5 billion deal to settle various putback claims would finally help the bank put the mortgage fiasco in the rearview mirror. But it didn't take long for the detractors--and there would appear to more than initially thought--to make their voices heard.

The spark for the opposition appears to have been an investor group known as Walnut Place, which filed the first complaint, charging that the deal was struck in secret and doesn't allow objectors to opt out. It also takes the Bank of New York Mellon to task for various conflicts of interest in its role as the trustee for mortgage pools in question. The New York AG soon opened an investigation. And now other investors are piling on.

According to Bloomberg, the Federal Home Loan Banks of Boston, Chicago, Indianapolis, Pittsburgh, San Francisco and Seattle are seeking to intervene in the case and may oppose the settlement, according to court papers. Several of the FHLBs have outstanding suits over disclosures made by Countrywide that would even if the settlement approved. This is yet another bad sign for Bank of America and an indication of just how hard it will be to account for all the mortgage-related issues holding it back. It may hearken yet more reserving action in subsequent quarters.

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