The Zacks Analyst Blog Highlights: JPMorgan Chase, Syncora Holdings, Assured Guaranty, MBIA and Bank of America

 The Zacks Analyst Blog Highlights: JPMorgan Chase, Syncora Holdings, Assured
                      Guaranty, MBIA and Bank of America

PR Newswire

CHICAGO, June 21, 2012

CHICAGO, June 21, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include JPMorgan Chase & Co. (NYSE:JPM),
Syncora Holdings Ltd. (OTC:SYCRF), Assured Guaranty Ltd. (NYSE:AGO), MBIA Inc.
(NYSE:MBI), and Bank of America Corporation (NYSE:BAC).

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Here are highlights from Wednesday's Analyst Blog:

JPMorgan May Face More Legal Costs

JPMorgan Chase & Co. (NYSE:JPM) may find itself in trouble as a Manhattan
Federal Judge ruled against it in a lawsuit related to losses on securities
driven by risky equity home loans. Syncora Guarantee Inc., a wing of Syncora
Holdings Ltd. (OTC:SYCRF), had filed the lawsuit against JPMorgan's EMC
Mortgage Corp unit.

Syncora had alleged that the violations of warranties by EMC triggered the
underlying loans to default. According to the U.S district judge, Syncora need
not substantiate its allegations in order to claim liability of banks in
bearing the losses.

Moreover, the court favored Syncora by stating that the defendant can
establish a material breach of contract by presenting the infringement of
representations and warranties by EMC, which lead to a significant
appreciation in material risk.

Syncora had alleged EMC of providing misleading information prior to signing
of  the agreement relating to insuring interest and principal repayments
pertaining to $666 million bond created in 2007 which were supported by 9,871
equity home loans.

Consequently, Syncora has shelled out more than $168.6 million in settling
claims and consistently facing incremental material risk. However, the judge
has denied equitable relief to Syncora.

From the viewpoint of the bond insurers, the court ruling could help them
breathe a sigh of relief, as now the banks would become liable for the losses
associated with sub prime and other perilous loans. Several insurance
companies like Assured Guaranty Ltd. (NYSE:AGO) and MBIA Inc. (NYSE:MBI) are
set to gain from the favorable court decision, which grants bond investors
special preference because of their distinct legal interests as against the
general investors.

Earlier, this year, Supreme Court of New York had ruled out a similar decision
in favor of MBIA, which had sued Countrywide Financial, a unit of Bank of
America Corporation (NYSE:BAC). MBIA has accused Countrywide for fraudulently
inducing it to insure precarious mortgage backed securities worth $20 billion
by providing misleading statements.

Conclusion

If JPMorgan repurchases risky loans due to legal pressure, its credit quality
might deteriorate to an extent in the near term. JPMorgan is facing a deluge
of lawsuits, elevated legal expenses and compensations for quite sometime now.
These will severely affect its financials as well as its reputation. Moreover,
with regulatory authorities cracking down hard on unwarranted activities of
the banks, they need to overcome their dubious practices for their own good.

Currently, JPMorgan retains a Zacks #4 Rank, which translates into a
short-term Sell rating. Considering the fundamentals, we also maintain a
long-term Neutral recommendation on the stock.

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