COMPANIES Bank of America, Citigroup, JPMorgan and 15 other large financial institutions filed suit on Wednesday against MBIA, claiming the bond insurer reduced its ability to pay policyholders by splitting its business in two.
The suit, which includes Barclays and HSBC of the UK as well as European banks, is the second legal challenge to MBIA’s restructuring since the bond insurer in February received regulatory approval to split into two: a “good bank” business responsible for guarantees of municipal bonds and a “bad bank” that had insured structured bonds backed by mortgages and other assets.
