MBIA has booked $1 billion in receivables on its balance sheet it expects to receive principally from ResCap, but in a first-quarter earnings conference call Friday the company quashed any hopes of a near-term resolution of that litigation. "We'd like to do it tomorrow morning, but that's not going to happen." CFO Chuck Chaplin told analysts on the call. "As everybody is well aware, a significant portion of our put-back recoverable is as a result of reps and warranty violations by the two subsidiaries of ResCap. ResCap is in an extended bankruptcy. A lot of mediation talks are going on. We don't have a specific forecast in terms of when those talks will resolve or whether they will resolve or whether it's going to be a different outcome. It is possible that if there was a successful mediation and that courts then were able to move through the process to allow ResCap to finish up its bankruptcy, you could see something very late this year or early next year."
Palmer believes investor disappointment over these comments may have led to selling in MBIA shares Friday, though signs of progress in the litigation late in the day may have caused a slight rebound, he argued. MBIA shares were down 0.26% to $15.38 mid-Monday afternoon, still essentially unchanged from where they were after the Bank of America deal was announced. -- Written by Dan Freed in New York. Follow @dan_freed