In Monday's note, Fong argued Bank of America will wait until it has concluded a separate but related $8.5 billion settlement reached with several large financial institutions, including Goldman Sachs (GS), Blackrock (BLK), PIMCOand the Federal Reserve Bank of New York over so-called "private label" mortgage securities. That settlement has been challenged by several parties, including the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the Federal Deposit Insurance Corporation and New York state Attorney General Eric Schneiderman.
"We now believe
Fong nonetheless continues to recommend MBIA shares with an $18 12-month price target, though he does not address liquidity concerns in Monday's note. The shares were down 3.52% to $8.77 in afternoon trading Monday after a big run-up Friday.
While Fong was arguing Monday a settlement is likely to take a while, BTIG's Palmer reiterated his opposing view in a separate note published the same day.In his note, Palmer contended Bank of America "really enters the danger zone," when New York State Supreme Court Judge Eileen Bransten finishes hearing oral arguments related to the question of whether Bank of America is to be held responsible for the actions of Countrywide prior to its acquisition of the lender in 2008. Once those arguments--scheduled to occur Wednesday and Thursday--have concluded, "any day that