Bank of America Sues Lehman

The great struggle for the remnants of Lehman Brothers has begun.

Bank of America is suing three Lehman Brothers Holdings units to recover almost $500 million provided as collateral for derivative transactions.

Several legal actions pending against Lehman since it collapsed. This Bank of America suit was apparently filed the day after Lehman declared bankruptcy. Interestingly, the details of the lawsuit seem to lend credence to the idea that banks were pulling their business out of Lehman in the weeks leading up to the bankruptcy: the lawsuit notes that Bank of America terminated its derivative contracts with Lehman on September 15.

From Reuters:

Bank of America’s lawsuit said it sought $468,028,363 plus accrued interest of more than $350,000 from three Lehman affiliates.

It said none of the three had filed for bankruptcy and are not restricted by the holding company’s bankruptcy from returning the money provided for derivative transactions.

“Although the transactions were terminated on September 15, 2008, and although the Lehman Entities have not requested any payment or collateral from BoA, the Lehman Entities have refused repeated demands to return the collateral to BoA, stating only that the accounts have been ‘frozen’,” the lawsuit said.

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