New York judge says MBIA ruling "getting there"

Thu Dec 6, 2012 6:08pm EST

* BofA, SocGen sued to reverse MBIA split

* Judge heard arguments last spring

* Judge did not say when she would rule

By Karen Freifeld

NEW YORK, Dec 6 (Reuters) - The judge in a case over the restructuring of bond insurer MBIA said her decision was "getting there," but gave no further indication on when she would rule.

"Trust me, I dream about your decision," Justice Barbara Kapnick told the lawyers in the case, who were in her courtroom for a related proceeding on Thursday. "It's taken longer than I would have liked."

Kapnick, of New York State Supreme Court, heard arguments in May and June over whether the New York insurance department was right to approve MBIA's split into two units.

Eighteen banks originally brought the case in 2009 against MBIA and the insurance department, including ABN Amro, Morgan Stanley and UBS AG . Since then, all but Bank of America and Societe Generale settled.

The banks, which were MBIA policyholders, claimed they were harmed in the restructuring when $5 billion was transferred out of the MBIA unit that insures risky mortgage debt and into a new unit that guarantees municipal bonds.

The lawyers appeared before the judge on Thursday to discuss pre-trial issues in a parallel fraud case that does not include the insurance department.

The case is ABN Amro Bank v Dinallo, No. 601846/2009, New York state Supreme Court, New York County.