Banks Sue MBIA Over Unit Split

nsurer MBIA Inc. has been sued by a group of 18 financial institutions, including J.P. Morgan Chase & Co., Bank of America Corp. and Morgan Stanley, according to a [link=http://online.wsj.com/article/SB124224623136616493.html][u]Wall Street Journal report[/u][/link]. The suit stems from MBIA's decision earlier this year to divide its businesses – a move the plaintiffs claim was fraudulent. The company distanced its mortgage exposures from its U.S. municipal-bond insurance portfolio, according to the Journal report, and transferred $5 billion in cash and securities from its main unit to the municipal-bond unit. Vince DiBlasi, a lawyer with Sullivan & Cromwell, which represents the group of banks, told the Wall Street Journal the lawsuit "simply seeks to ensure that policy holders receive what they have paid premiums for: contractually guaranteed insurance protection." SOURCE: Wall Street

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