MBIA stock soars on rumors of settlement with Bank of America
MBIA's (MBI) stock soared Thursday as rumors circulated suggesting Bank of America (BAC) agreed to settle pending claims with the bond insurer. MBIA alleges it was left holding the bag on toxic mortgages it insured for Countrywide Financial, which was later acquired by Bank of America. A source told HousingWire there were rumors on Wall Street that a settlement offer was made to MBIA by BofA, but no details were available as of Thursday afternoon. Bloomberg first reported the story, citing anonymous sources familiar with the agreement. MBIA had no comment. BofA couldn't immediately be reached. An analyst with CreditSights predicted a possible settlement between the bond insurer and Bank of America last week as he raised his outlook for MBIA. At the time, Rob Haines with CreditSights said any settlement between MBIA and Bank of America would add liquidity that could help the insurer throughout the course of the next few years. Earlier this month, an appeals court refused to throw out a fraud claim that MBIA brought against BofA and Countrywide. In the suit, MBIA alleged Countrywide fraudulently represented mortgage-backed securities that MBIA ended up insuring. Write to Kerri Panchuk.