As the date draws near for the May 30 Article 77 hearing on whether or not Bank of America's (NYSE:BAC) $8.5 billion settlement with 22 institutional investors will go forward or back to the starting gate, one thing is becoming very clear: Revived insurance giant AIG (NYSE:AIG) isn't about to let B of A off the hook for a slew of disintegrating mortgage securities sold through Countrywide.

Last Friday marked the day by which Judge Barbara Kapnick pronounced objections to the settlement had to reach her New York City courtroom. According to Reuters, AIG and a handful of Federal Home Loan banks are still in opposition. For its part, AIG is declaring the settlement "unreasonably and unjustifiably small."

AIG is determined get some of its own back
AIG is feeling its oats again, and is setting out with vigor to squeeze some reparation from those that assisted with the megainsurer's downfall. One of those entities is Bank of America, the not-so-proud owner of Countrywide.

Recently, AIG won a victory over B of A in another suit over $28 billion of crummy mortgage-backed securities, in which the insurer claims that Countrywide and Merrill Lynch lied about the quality of those instruments.

AIG is looking for a $10 billion payday in that case, which a judge just agreed should be heard in state court, as AIG wanted, rather than federal court -- which was Bank of America's preferred venue. Despite promises to Bank of America from the New York Federal Reserve Bank of New York, AIG is not backing off its resolution to get back some of the money it lost.

MBIA suit still alive and well, too
Similarly, the ongoing skirmish between monoline insurer MBIA (NYSE:MBI) and B of A is also heating up, despite the fact that the insurer did not win a summary judgment in its suit against the bank, which means the whole mess is headed for trial. This doesn't translate into a cakewalk for B of A, though. The issue of whether or not the big bank is liable for Countrywide's prior behavior is still up in the air, while earlier court rulings have stated that Bank of America may be required to repurchase even those loans that are not currently in default.

Regulators drop their opposition
There were a few points of light for B of A in Friday's news, however. While stopping short of supporting the settlement, the Attorneys General of New York State and Delaware have declared they no longer have objections to the deal. In addition, the Federal Housing Finance Agency also dropped its opposition to the settlement.

While regulators have taken some of the pressure off, others like AIG are clearly willing to go to the mat over this issue. If investors get good news at the Article 77 hearing, expect AIG to show Bank of America no mercy in the coming months on the murky mortgage front.

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