Dec 5 Bank of America Corp said
Wednesday that it has waived certain conditions related to its
offer to buy MBIA Inc bonds, the latest move in a
dispute between the two companies.
The No. 2 U.S. bank by assets offered on Nov. 13 to buy some
of the insurer's bonds to thwart changes that MBIA had proposed
in the terms to its debt. But on Nov. 26, MBIA said it won the
necessary consent of bondholders to make the changes.
Nevertheless, Bank of America is proceeding with its offer
to buy the bonds until Dec. 11, or longer, if extended. It
waived conditions that could have stopped the offer from going
Bank of America declined to comment. MBIA had no immediate
MBIA proposed the changes to its debt on Nov. 7 to eliminate
the risk that it might be considered in default if a troubled
insurance unit were put into rehabilitation or liquidation by
the New York State Department of Financial Services.
MBIA said at the time that if there were such a default, it
would have insufficient liquidity to make good on the notes and
would probably immediately pursue other actions, including
Bank of America Corp, which is tangled in legal
disputes with MBIA, countered with its offer, saying it believed
the changes would increase the risk of MBIA's insurance unit
being placed in rehabilitation or liquidation. That would
jeopardize all policyholder claims, including Bank of America's,
the bank said.
In the ongoing legal dispute, MBIA claims that Bank of
America owes it billions of dollars over soured mortgages that
it wants the bank to buy back. Bank of America says the insurer
owes it billions over certain credit default swap transactions.