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MBIA Inc. Message Board

  • tony27719 tony27719 Feb 8, 2013 5:59 PM Flag

    If BaC pays MBI proportionate to what Flagstar paid to AGO

    If MBI gets 4.5 rather than 5.0 billion the amount would be about $23 per share.

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    • The proportion AGO got was 100% of the amounts paid by them. The confusion is about their claim re the interest compensation. AGO asked for 9% but was granted by the judge the contractual Libor + 2% rate. All in all Ago will be fully compensated.

      I even expect that from now on Flagstar has to consolidate the two SPV's on their books as the economic risk has entirely shifted towards them. The latter will be a very interesting one for BAC. Another reason to settle soon.

      • 1 Reply to nilsdegraaf
      • You raise an interesting question with regard to the consolidation and future damages. I saw nothing to indicate AGO can come back and ask for more money if say the housing market were to collapse tomorrow. The AGO settlement with Countrywide provided for this sort of variability but I didn't see it in the Rakoff ruling except that Flagstar is entitled to money when the trust closes in certain circumstances. Also worth mentioning that BAC was not required to consolidate the AGO insured entities to my knowledge even though there was clear variability while Flagstar does not have variability (at least that I saw).

        How confident are you that AGO can come back and ask for more and on what basis can they do so? I admit it is a leading question to an extent, I can make an argument for variability but it is a really weak argument and I'm wondering if you are making overly aggressive arguments.

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