I'm extremely negative on MBI. However, after 15 down days in a row, even I believe this stock should have a significant pop. To answer your question, I don't believe "civilians" fully appreciate how close MBI skates to the edge of oblivion. This is taken right from Reuters after the BAC settlement and right from the horse's mouth:
In a statement, Benjamin Lawsky, New York's financial services superintendent, said the deal was reached after more than a year of negotiations. He called it "a very positive step forward for both Bank of America and MBIA."
The deal came together after MBIA's board hired Blackstone Group LP (BX.N) as an adviser, said a person familiar with the matter, who was not authorized to discuss it publicly. A Blackstone spokesperson did not immediately respond to a request for comment on their role.
MBIA's structured finance unit could have been forced into liquidation or rehabilitation had the Bank of America case continued, the insurer said on February 27. Brown said that month that there was a "significant risk" of a regulatory proceeding.
In 2011, the municipal bond guarantee business lent $1.1 billion to the structured finance unit to fund settlements with bond buyers, debt that over time grew to be $1.7 billion. But the company's regulator refused to allow the structured finance unit to borrow more.
MBIA will use proceeds from the Bank of America deal to repay that loan, which stood at $1.6 billion as of May 2, following a $110 million payment from a separate settlement with Flagstar Bancorp Inc (FBC.N).