MBIA can continue its fraud case against Bank of America
NEW YORK, (Reuters) – Bond insurer MBIA Inc may pursue its case against Bank of America Corp over toxic mortgage-backed securities packaged by Countrywide Financial Corp.
In decisions made public Monday, New York State Supreme Court Justice Eileen Bransten denied Bank of America’s motion for a pre-trial ruling that it should not be held liable for claims against Countrywide.
Bransten also rejected MBIA’s summary judgment motion that Bank of America should assume Countrywide’s liabilities. Bank of America, the second-largest U.S. bank, acquired Countrywide in 2008.
Bank of America had argued MBIA was seeking a “windfall” by holding it liable for Countrywide’s alleged misrepresentations. Bank of America said the claims were barred because the bank paid “fair value” for Countrywide’s assets in 2008.
Branstein didn’t buy the bank’s “fair value” argument.
“Whether fair value is paid for the assets acquired has no bearing,” Bransten wrote in her ruling.