Losers in the Bank of America, MBIA bond battle


I noted recently that there's been some interesting skirmishing in the Bank of America vs. MBIA put back war.

Bank of America has moved forward with a tender offer, aiming to buy a majority of $329 million in bonds to block MBIA from moving forward with a "cross-default provision" in the bonds. As the bond now allow, creditors can demand payment from the parent company if the MBIA Insurance unit is seized by regulators. MBIA would rather such demands be made of its municipal unit, National Public Finance Guarantee Corp. The need to protect the parent is acute right now, because various claims (owned by Merrill Lynch) could easily push it into insolvency if the change is not approved. Both companies are playing hardball in this long-running dispute.

The New York Times weighs in with a wry look, noting that, "Lawyers are cleaning up.The only people who don't seem to be doing very well are those who are most deserving: the victims of the crisis."

It also noted, a "significant part" of the victim's pain "could have been avoided had either Countrywide or MBIA acted responsibly, and made sure that it was not either making or insuring loans that were all but certain to go bad when the property bubble burst. The same can be said for the rating agencies and the institutional investors who bought the securitizations, not to mention the regulators who allowed all that to happen and the press that failed to call enough attention to what was going on. If all this money is going to be spent, it would be nice if some of it could go to the victims rather than the lawyers."

That really is asking too much in this day and age.

For more:
- here's the article

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