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| Jon Macaskill is one of the leading capital markets and derivatives journalists, with over 20 years’ experience covering financial markets from London and New York. Most recently he worked at one of the biggest global investment banks |
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Brown’s tactic of trying to split some banks from the pack of firms pursuing MBIA with a claim that it should not have been allowed to split into two separate units in 2009 is bearing fruit. Barclays and JPMorgan dropped out of the suit at the end of last year and others might follow if they can agree terms to commute existing trades with MBIA.
The remaining banks in the suit recently enlisted BlackRock – the new expert witness of choice for fixed-income market disputes – to produce a report saying that because MBIA underestimated future losses by about $12 billion when it split in two, the separation should not have been allowed.
While it fights this case, MBIA is simultaneously suing banks including Bank of America, Credit Suisse and Morgan Stanley, claiming that they knew that mortgages backing deals they insured with the firm were fraudulent.
