Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of insurance provider MBIA (NYSE:MBI) finished the day down 19%, after Bank of America (NYSE:BAC) said it would buy the insurer's bonds in order to block it from separating itself from a unit that insured B of A on mortgage debt.

So what: Bank of America's move comes after MBIA attempted to get bondholders to agree to a change in terms on nearly $900 million in bonds that would keep its insurance unit from forcing the company into bankruptcy. Litigation between the two companies has been brewing since 2009, dealing with broken contracts on toxic mortgage debt. MBIA is also countersuing Bank of America, saying its Countrywide division misrepresented the quality of mortgages that MBIA insured.

Now what: Bank of America offered to pay face value for the bonds valued at a steep discount, and its strategy seems to be to weaken MBIA's liquidity in order to undermine its legal case. Considering today's drop, the liquidity risk, and the legal uncertainty ahead, prospective investors would be wise to sit this one out.

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