Bank Of America Rebuffs Mortgage Letter From Investors

Bank of America Corp. (BAC) said Tuesday it will "vigorously defend" itself against demands from a group of investors that it take back billions of dollars in failing mortgages originally issued by the Charlotte bank's Countrywide subsidiary.

"We're not responsible for the poor performance of loans as a result of a bad economy," the bank said in a statement. "We don't believe we've breached our obligations as servicer. We will examine every avenue to vigorously defend ourselves."

The Federal Reserve Bank of New York, BlackRock Inc. (BLK) and The Pacific Investment Management Co., a unit of Allianz SE (ALIZF), are all investors named in the letter, said people familiar with the matter.

Shares in Bank of America spiralled Tuesday afternoon after investors named in the letter surfaced. They closed down 4.4%, to $11.80.

Bank of America bought Countrywide in 2008 during the depths of the financial crisis. The New York Fed inherited its positions in the Countrywide securities through its 2008 rescues of Bear Stearns Cos. and American International Group Inc. (AIG).

-By Marshall Eckblad, Dow Jones Newswires; 212-416-2156; [e-mail]