MBIA Inc. (MBI), the bond insurer seeking reimbursement from Bank of America Corp. (BAC) over faulty mortgages, surged the most in seven months after pledging to carry on a court fight to force the lender to repurchase the loans.
MBIA climbed 14 percent to $10.02 at 1:47 p.m. in New York, the biggest intraday advance since Jan. 3 and today’s second- best performance in the Russell 1000 Index. (RIY) Shares of the Armonk, New York-based company had declined 24 percent this year through yesterday.
“We are prepared to fight this all the way if we cannot reach a reasonable and economic settlement consistent with what we have achieved with all other counterparties,” Chief Executive Officer Joseph B. Brown, 63, said today in a conference call with analysts after the firm yesterday reported a second-quarter adjusted pretax loss of $152 million.
MBIA’s “direct economic damages” from unpaid Bank of America mortgage putbacks are almost $5 billion, Brown said. MBIA is among firms that took losses on home loans tied to Bank of America and are seeking to force the lender to repurchase the mortgages.
Bank of America probably has set aside $1 billion to $2 billion for MBIA costs in litigation reserves, Charles Peabody, an analyst at Portales Partners LLC in New York, has said. That amount should be adequate, he said.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment.
Bank of America made a “conscious decision to employ aggressive delay tactics in the litigation and withhold the billions of dollars they owe us in a way to pressure us to accept a heavily discounted and non-economic settlement,” Brown said in the conference call.
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