On the other hand, the lawsuit being overseen by Judge Bransten has the potential to substantially increase Bank of America's liability for Countrywide, according to Palmer.
"The clock is ticking," in that case, Palmer argues. "More than ever, it's in the bank's interest to settle."
Palmer expects Bank of America to settle "long before" a potential trial of the remaining challenge to MBIA's restructuring.
A Bank of America spokesman did not respond to an email seeking comment. An MBIA spokesman had no immediate comment.-- Written by Dan Freed in New York. Follow @dan_freed