BoA CEO Compelled to Testify in MBIA Case

New York Supreme Court Justice Eileen Bransten’s decision to reject Bank of America’s request to relieve their CEO from having to testify in the long running case between MBIA and BoA over MBIA’s insuring of many of Countrywide Mortgage’s late vintage RMBS financings may have the effect of accelerating the resolution of a case which continues to hang like a cloud over the recovery of both companies and the mortgage-backed markets.

The judge ruled that BoA CEO, Brian Moynihan, may in fact have some very relevant information to lend to the case and therefore MBIA should be able to bring him to the witness stand.  The judge cited both Moynihan’s role as head of the integration of the Countrywide acquisition and his responsibilities as head of BoA’s Investment Bank during at least some of the time that the events are alleged to have taken place, as very good reasons for rejecting BoA’s request.

We won’t take sides but, whatever the outcome, we believe that the market will benefit from a speedy resolution.  Assuming that both MBIA and BoA are not too seriously harmed by the result, we believe it would also assist the recovery of both of these former high-flyers that have been so clearly limping along over the last several years, at least in some part, because of this case.

Perhaps the prospect of calling the CEO to the stand will accelerate the resolution process.

About markferraris
Managing Principal Orchard Street Partners LLC

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