This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

MBIA Legal Win Over Bank of America Drives Shares to 52-Week High

Stocks in this article: BAC MBIA SCGLY

NEW YORK ( TheStreet)-- MBIA Inc. (MBI) shares rose more than 20% on Monday, hitting a new 52-week high of $12.93, following dismissal of a legal challenge by Bank of America (BAC) and Societe Generale (SCGLY) to its 2009 restructuring.

MBIA reorganized in 2009 to protect its municipal bond insurance unit from losses to another unit that insured mortgage securities, which suffered severe losses during the bursting of the U.S. housing bubble in 2008.

Several banks challenged the restructuring, though most of them eventually dropped out, with only Bank of America and Societe Generale remaining.

New York State Supreme Court Justice Barbara Kapnick dismissed the challenge Monday, though she noted a related legal challenge to the restructuring remains active.

The victory for MBIA advances the attempted turnaround of the embattled bond insurer, while also increasing the likelihood of a settlement with Bank of America in a separate dispute over mortgage backed securities (MBS), according to an email message from BTIG analyst Mark Palmer. That case is being heard by New York State Supreme Court Justice Eileen Bransten.

The potential settlement of Bransten's case is critical to several MBIA bulls, including Palmer, who believes MBIA shares will eventually reach $25, and portfolio manager Bruce Berkowitz of Fairholme Funds.

They argue MBIA will eventually settle for an estimated $3 billion with Bank of America in the case being heard by Judge Bransten. In that case, MBIA has argued Bank of America's Countrywide unit made false representations in mortgages it sold and MBIA agreed to insure.

Palmer says Monday's ruling increases pressure on Bank of America to reach a deal in the case before Judge Bransten, because if its challenge to the restructuring had succeeded, it could have avoided the settlement.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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