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Thursday's Headlines: Bank of America agrees to support Lehman bankruptcy exit

Bank of America and its subsidiary Merrill Lynch have agreed to support Lehman Brothers' $65 billion bankruptcy exit plan, reducing their claims by a combined $7.5 billion, Reuters reports.

Bank of America will cut its derivatives claims by $4.5 billion while Merrill Lynch will cut claims by $3 billion. In addition, Bank of America will return $356 million in funds to Lehman Brothers that had been paid as part of a previous claim.

"The settlement is part of a larger effort by Lehman to resolve complex claims from big banks that were counterparties in various derivatives transactions totaling more than $20 billion," Reuters writes. "Lehman in May unveiled a framework for settling those disputes, and so far, eight of 13 banks have agreed to abide by the framework and pledge support for Lehman's plan," according to Reuters.

Other Headlines:

Citigroup CEO Pandit says Citi exposure to eurozone risk is "extremely manageable." [Bloomberg]

Santander CEO Saenz expects profits to improve over three years as Spain and Portugal recover. [MarketWatch]

SEC investigating whether RBS and Credit Suisse lied to shareholders about loan repurchase requests. [Financial Times]

U.S. investment banks struggle to raise funds in China due to exclusionary Chinese rules. [DealBook]

U.S. mortgage fraud reports jumped 88% in second quarter, regulator says. [Financial Times]

Goldman Sachs, TCW lawsuit brought by German state-owned bank over unprofitable derivative product dismissed. [Reuters]

France's Credit Agricole wants to reduce corporate and investment banking business, to cut net debt by 50 billion euros. [Financial Times]

UBS may lose top wealth manager spot after rogue trading loss as clients fret. [Bloomberg]

HSBC general insurance business sale likely to see bids from Allianz and AXA. [Reuters]

U.S. banks chasing profits in emerging markets face hardships and losses. [DealBook]

FBI investigating ex-Edward Jones brokers for raising money in alleged Ponzi scheme. [Investment News]

ABN Amro to buy German private banking business from Liechtenstein's LGT group. [Wall Street Journal]

New rules for financial sector could increase borrowing costs for European companies up to 50 billion euros, S&P says. [Financial Times]

Hedge fund manager found guilty of $100 million fraud is sentenced to 60 years in jail. [DealBook]

SEC bans former SAC Capital Advisors portfolio manager Donald Longuiel. [Hedge Fund Net]

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AUTHORDalia Fahmy Insider Comment

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