Reuters reports that the deal will also see BofA will remit $137 million worth of MBIA senior debt it acquired in December and provide MBIA with a $500 million credit line.
The settlement will wipe clean a slate littered with disputes between the two companies, including liability for MBIA as counterparty in swap deals with BofA.
Financial crisis
According to the report, the deal is that latest step in BofA chief executive Brian Moynihan's plan to end litigation related to the financial crisis.
After the announcement, MBIA shares soared as much as 57 per cent while BofA shares closed up 5.2 per cent.
Axinn Veltrop & Harkrider partner Don Hawthorne who has represented clients in mortgage-backed securities litigation, said that the settlement was ‘probably a good deal all around’, pointing out BofA’s solid negotiating position and MBIA’s strong case equalled each other out.
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