Bank of America Returns to a Familiar Battlefield

Bank of America’s latest SEC filing shows another big battle brewing with monoline insurer Ambac

Mar 2, 2014 at 8:00AM

Bank

Things have been looking up recently for Bank of America Corp. (NYSE: BAC), particularly where litigation is concerned. The recent court approval of the lion's share of its 2011 $8.5 billion settlement with a slew of institutional investors was a huge win, as was the court's refusal to allow AIG to drag the process out further.

The bank's recent 10-K filing with the Securities and Exchange Commission, however, shows that the legal fracas over toxic mortgages pumped out by Countrywide in years past hasn't died down just yet. Ambac Financial (Nasdaq: AMBC), recently emerged from bankruptcy, is looking for more than $2.5 billion from B of A for damages related to junk loans underlying disintegrating mortgage bonds.

Ambac, which insured these mortgages, has been paying out on these loans – and it wants its money back, not only for what it has already forked over, but also for "future claims it has paid or claims it will be obligated to pay under the policies, increasing over time as it pays claims under relevant policies, plus unspecified punitive damages."

Echoes of MBIA
This situation stirs up memories of the infamous Bank of America-MBIA (NYSE: MBI) fight, which dragged on for years with the two engaging in a series of skirmishes that bordered on the bizarre. Finally, B of A and the struggling monoline insurer settled last May, for $1.7 billion – a welcome and much-needed infusion of cash for MBIA, which was tottering on the brink of extinction.

Mortgage-bond insurers have been suing big banks ever since the financial crisis, and B of A, with the acquisition of subprime-lending mill Countrywide, has been a prime target. In addition to the MBIA settlement, B of A also settled up with Syncora Holdings in July 2012, paying $375 million to put paid to claims by that company. But Bank of America isn't the only one paying out: JPMorgan Chase & Co. (NYSE: JPM) has just paid Syncora an undisclosed settlement amount as well, settling all claims against the bank by the monoline, and allowing the insurer to "remove substantial doubt" regarding its future survival.

What will Bank of America do now?
This disclosure was simply part of a legally required regulatory filing, and not a direct comment upon the pending situation by B of A, so the bank may not be planning any specific action in the near future. JPMorgan's settlement with Syncora, along with the fact that the Ambac suit is now out in the open, may put pressure on Bank of America to settle this issue, however – particularly by the bank's investors, who must surely be tiring of the never-ending stream of mortgage troubles emanating from Bank of America.

Is this the future of banking?
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers