This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Ambac Settles $6.1B Lehman Suit

NEW YORK ( TheStreet) -- Ambac Financial Group's (ABK) subsidiary Assurance Corp. has filed with the U.S. Bankruptcy Court in Manhattan to withdraw over $6.1 billion in claims against Lehman Brothers Holdings (LEHMQ) as part of a legal settlement.

The settlement calls for Ambac and Lehman to release each other from any further liability for derivative transaction disputes related to the Lehman bankruptcy.

"Lehman probably had claims against Ambac because they wrapped their deals," says Ed Grebeck, CEO of Tempus Advisors. "It seems like a quid pro quo, but I'm sure Lehman's claims were nowhere near Ambac's."

The deal still needs to be approved by the bankruptcy court, but has the support of Lehman's unsecured creditors, according to an article by The Wall Street Journal.

Ambac is one of several monoline insurers, along with MBIA (MBI - Get Report) that are suing investment banks for losses due to improper due diligence. Ambac has also sued Bank of America (BAC - Get Report) for over $16.7 billion of mortgage-backed securities, according to published reports. The insurer is claiming that the Countrywide Financial Corp. unit fraudulently induced Ambac to insure bonds to loans that were not made properly.

"This is likely to be an indicator of how many other legal cases with Ambac are handled by the banks," said Grebeck.

"I don't think you could use it as a barometer because Lehman Brothers is using this as a special situation for settling Lehman's bankruptcy. It wouldn't be same for an ongoing business that has the capital to back it up," argues Jim Ryan, a senior analyst of equity research at Morningstar.

Ambac Financial Group's assets were seized by Wisconsin state regulators announced in March that it may have to eventually file for bankruptcy.

An Ambac spokesperson said there was no comment on the settlement.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here: Maria Woehr.

To follow the writer on Twitter, go to

To submit a news tip, send an email to:

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.36 -0.16%
MBI $9.29 -0.11%
AAPL $123.93 -0.40%
FB $81.42 -0.96%
GOOG $543.50 -0.82%


DOW 17,691.98 -84.14 -0.47%
S&P 500 2,056.87 -11.02 -0.53%
NASDAQ 4,860.8480 -40.0370 -0.82%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs