Bank of America Corp.’s claims against MBIA Inc. (MBI) over the bond insurer’s 2009 restructuring are supported by an insurance regulator’s refusal to let MBIA make an interest payment, a lawyer for the bank said.
The decision by New York’s Department of Financial Services, disclosed yesterday by MBIA, backs claims from Charlotte, North Carolina-based Bank of America and Paris-based Societe Generale SA (GLE) in litigation against the insurer, a lawyer for the banks said in a letter to state Justice Barbara Kapnick today. The banks claim assets were improperly transferred out of MBIA Insurance, harming policyholders.
The regulator’s decision to reject an interest payment on notes “confirms that MBIA Insurance cannot meet its financial obligations without the $5 billion improperly siphoned from MBIA Insurance,” the lawyer, Robert Giuffra, wrote.
Kapnick last year presided over a trial at which the banks sought to reverse the state’s approval of MBIA’s restructuring. The judge in December said she was “getting there” on making a decision in the case. A separate lawsuit is also pending.
Kevin Brown, a spokesman for Armonk, New York-based MBIA, didn’t immediately respond to an e-mail seeking comment on the letter.
The cases are ABN Amro Bank v. Dinallo, 601846-2009, and ABN Amro Bank v. MBIA, 601475-2009, New York State Supreme Court, New York County (Manhattan).
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