A New York judge has ruled that Bank of America CEO Brian Moynihan must testify in a lawsuit brought by bond insurer MBIA Inc. which claims the bank fraudulently induced it to insure risky mortgage-backed securities.
The judge said Moynihan could provide relevant testimony in the case due to his position as CEO, former president of investment banking and the fact that he oversaw the process of integrating Countrywide into Bank of America.
Bank of America acquired mortgage lender Countrywide in July 2008. MBIA filed a Countrywide later that year. In 2009, MBIA claimed Bank of America was liable for Countrywide's conduct.
Bank of America, the second-largest U.S. bank by assets, is fighting several legal cases following the global financial crisis and had sought to block MBIA efforts for Moynihan to give evidence.
MBIA was once the largest U.S. municipal bond insurer. It announced a restructuring in 2009 after incurring large losses insuring mortgage debt.
Bank of America had asked New York Supreme Court Justice Eileen Bransten to rule that Moynihan did not need to testify, arguing that MBIA was seeking his deposition only to harass the bank and that Moynihan had no unique knowledge about the case.
But the judge on Wednesday denied the request, according to court papers made public on Thursday.
"The knowledge Moynihan gained as part of the (Countrywide) Steering Committee is unique, and it is material and necessary to MBIA's successor liability claim," the judge said.
Moynihan was involved in "high-level decisions regarding the Countrywide transaction" and his testimony will not duplicate that of lower-level employees, she said.
MBIA declined to comment and Bank of America did not immediately respond to requests for comment.
The cases is MBIA Insurance Corp v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 602825/2008.
