Legal

Jan 19 (Reuters) - Bank of America's eagerly-awaited fourth-quarter Securities and Exchange Commission filings landed Thursday. (Here's the filing, here's the bank's summary, and here's the slide show for analysts.) The bank reported that its liability for breaches of representations and warranties in mortgage-backed securitization contracts is up to $15.8 billion, with outstanding reps and warranties claims by Fannie Mae, Freddie Mac, bond insurers, and private-label investors already totalling $14.2 billion. (I thought BofA was making an obscure reference to Manhattan Supreme Court Justice Eileen Bransten's recent grant of summary judgment to two bond insurers suing Countrywide over mortgage-backed securities in a note saying that its "estimated range of possible loss related to non-GSE representations and warranties exposure could be up to $5 billion over existing accruals"; but that language has actually been in previous filings as well.)

Two other numbers jumped out at me from BofA's disclosures: $1.5 billion in fourth-quarter "litigation expenses" and $6.3 billion in "mortgage-related litigation expense and assessments and waiver costs" in all of 2011. Did that disclosure mean that BofA paid Wachtell, Lipton, Rosen & Katz; Goodwin Procter; Munger, Tolles & Olson; and all the other firms defending BofA and Countrywide in MBS litigation billions of dollars last year --including $1.5 billion in just the last three months?

Alas for Wachtell, Goodwin, and the rest of BofA's defenders, it turns out that the bank's "litigation expense" disclosure doesn't actually have anything to do with what it's spending on litigation. According to a BofA source, the $1.5 billion and $6.3 billion figures refer to reserves the bank has taken to cover mortgage-backed securities exposure and doesn't even include whatever it's paying in legal fees.

In fact, those fees aren't broken out anywhere in BofA's disclosures. So we'll just have to imagine how many millions BofA has shelled out to its outside law firms, but stop those daydreams well short of the billion-dollar mark.

(This story has been corrected to clarify that the disclosure of a potential $5 billion in additional exposure does not refer to recent ruling in New York state-court litigation between Countrywide and bond insurers.)

(Reporting by Alison Frankel)