This Day On The Street
Continue to site
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

Bank of America: Mortgage Overhang Removal Winner

The settlement is subject to the approval of the New York State Department of Financial Services, which the companies said was "expected to be received shortly."

"We are very pleased to have reached a comprehensive settlement agreement with Bank of America that improves the outlook for MBIA Insurance Corp. and sets the stage for [MBIA subsidiary National Public Finance Guarantee Corp.] to reclaim its leadership position in the U.S. public finance insurance market," said MBIA CEO Jay Brown ion his firm's press release.

"I appreciate Bank of America's efforts to arrive at a fair agreement that resolves a number of legacy issues for both institutions as well as the assistance provided by Superintendent Lawsky and the New York State Department of Financial Services," Brown said.

Investors are counting on the Bank of America deal to end MIBA's liquidity problems. The bond insurer's shares spiked 45% on Monday, to close at $14.29. This puts Bank of America "in the money" on its warrants, by $4.70 per MBIA share, or approximately $46.7 million.

Rafferty Capital Markets analyst Richard Bove said in an email that "the outlines of the settlement are significantly better than I expected. It had been my assumption that this lawsuit would cost Bank of America 2 billion dollars. It is considerably less than that".

Pressure on James Dimon

It has been widely reported that in the wake of last year's "London Whale" trading debacle and loss in its Chief Investment Office (CIO) of at least $6.2 billion, that bank regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, have expressed distrust in the management team of JPMorgan Chase (JPM - Get Report).

At JPMorgan's annual meeting on May 21, investors will vote on whether or not to separate the bank's chairman and CEO roles. This move is supported by ISS Proxy Advisory Services, which last Wednesday said it was "supporting the shareholder proposal requesting an independent chair given the governance failure in connection with the CIO incident, the size and complexity of JPM's business, and the continued challenges faced by the company."

Rafferty Capital Markets analyst Richard Bove on Monday made a strong case for allowing Dimon to keep both the CEO and chairman titles. Bove wrote in a note to clients that "Jamie Dimon joined the executive team of JPMorgan Chase in 2005. In that year, JPMorgan earned $8.5 billion. In 2012, the company earned $21.7 billion. The pretax, pre-provision results per share went from $4.41 to $8.62 or a gain of 95.5%." Bove added that "from the end of 2005 to last Friday, the stock price has risen by 19.9%. In this same period the Keefe Bruyette banking Index has fallen by 39.5%. JPMorgan has outperformed its peers by approximately 60% over this timeframe."

2 of 3

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
Only $9.95
14-Days Free
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
SYM TRADE IT LAST %CHG
BAC $17.77 0.00%
JPM $68.53 0.00%
MBI $5.83 0.00%
AAPL $118.44 0.00%
FB $94.14 0.00%

Markets

Chart of I:DJI
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASDAQ 5,115.3820 -12.8990 -0.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs