MBIA (NYSE: MBI), the largest U.S. bond insurer before it suffered major losses from insuring sub prime and other risky securities, has a plan to restructure it’s businesses. Up to now, this plan has been opposed by JPMorgan Chase (NYSE: JPM) and Barclays Plc (NYSE: BCS).
JPMorgan Chase and Barclays disclosed their decision not to oppose MBIA’s plan to split its municipal bond insurance business from its structured finance operations in a filing with the New York State Supreme Court in Manhattan. The banks did not give a reason, and have not made a public statement on the matter to date.
MBIA announced the planned split in 2009, in a restructuring overseen by the state’s insurance commissioner. The company has said the split would allow it to continue to guarantee municipal bonds, allowing local governments to borrow more cheaply. But opponents said it would fraudulently transfer billions from its MBIA Insurance unit, leaving it without sufficient funds to cover claims stemming from guarantees on complex financial instruments.
The actions by JPMorgan and Barclays don’t leave MBIA fully in the clear though – more than a dozen major banks remain as plaintiffs opposing the MBIA plan, including Citigroup Inc (NYSE: C) and HSBC Holdings Plc (NYSE: HSB).
Shares in MBIA closed up nearly 9% in response to this news, to $10.36 per share.
