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Bank of America Gets Kicked in the Trousers

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By John Maxfield, The Motley Fool

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It’s safe to say that Bank of America has seen better days. Besides the unfortunate performance of its shares last week, the nation’s second largest bank by assets recently received an unwelcome kick in the trousers by the New York court of appeals. The ruling is part of a long-simmering dispute between the bank and the mortgage-bond insurer MBIA . In the video below, Motley Fool contributor John Maxfield discusses the case and what it means for Bank of America’s shareholders.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool‘s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The Newest Assault on Bank of America's Profits

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By Amanda Alix, The Motley Fool

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When it comes to buyer’s remorse, the purchase of Merrill Lynch by Bank of America in 2009 probably doesn’t come close to that of the Countrywide acquisition a year earlier. The Merrill buyout has spawned its share of losses, however, and the recent blessing of the lawsuit settlement terms reached last September by B of A and a group of institutional investors is, at $2.4 billion, a princely sum that will hit the bank’s bottom line like a slap — and, it’s not the only legal morass still facing the superbank.

2008: A bad year for acquisitions
Investors claimed that they were kept in the dark regarding Merrill’s sorry fiscal state of affairs at the time of the purchase, as well as the plan to award over $3.6 billion in bonuses to executives. Later testimony by former CEO Ken Lewis lent credence to this claim, and the $50 billion deal that stockholders approved wound up costing B of A $9 billion in debt offerings, a fourth-quarter loss of nearly $16 billion, and triggered another $20 billion taxpayer bailout. At least the transaction only cost $18.5 billion, rather than the original $50 billion, when it closed in January 2009.

Unfortunately, this is not the only lawsuit pending against B of A pertaining to Merrill Lynch: Insurance giant Prudential has filed a claim in federal court in New Jersey claiming fraud on $2 billion worth of securities sold from 2004 to 2007 — and leveling racketeering charges against the bank, to boot.

A never-ending stream of legal hassles
Those familiar with Bank of America are well-acquainted with its myriad legal problems, many caused by toxic mortgages produced by Countrywide — very nicely laid out here. Peers face problems in this arena, too. JPMorgan Chase recently celebrated a win in claims filed against it by Belgian bank Drexia over $1.6 billion in soured mortgage loans, it but still faces putback claims on mortgage-backed securities valued at more than $140 billion, as well as the $33 billion complaint filed against it by the Federal Housing Finance Agency.

Wells Fargo was sued last fall by the U.S. government over a decade’s worth of shoddy mortgage production. In addition, the bank has also been sued by homeowners who claim that Wells supplied no relief to borrowers who participated in Wells-acquired Wachovia’s “Pick-a-Payment” program, despite a judge’s instruction to provide assistance.

As for Bank of America, it still faces two onerous lawsuits, neither of which has been moving in a favorable direction for the bank. One is the lawsuit brought by investors including Blackrock and PIMCO, which was settled back in 2011 for $8.5 billion, but has now been reopened because of findings by the plaintiffs that B of A acted more in its own interest than that of investors when modifying mortgages. If the settlement is not affirmed by a judge, the bank may wind up owing much more.

The other is the battle in which it is embroiled with mortgage insurer MBIA …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Bank of America Rallies From Early Morning Drop

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By Jessica Alling, The Motley Fool

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After another blow from the labor market caused many stocks to tumble this morning, Bank of America is making a comeback. Though it sunk by 2.2% right after the markets opened, the bank was back to breakeven within two hours and now sits at a 0.25% gain right before 1:30 p.m. EDT. The bank has some new customer-focused initiatives to thank for today’s gains as it tries to recoup some of its losses from Wednesday.

Earlier in the week, B of A investors were happy to hear that the bank had settled with the National Credit Union Association for its alleged sale of faulty mortgages. Though the settlement is small, it is an important one for the bank, which continues to struggle with legal issues.

Speaking of negative impacts from legal battles, Bank of America was dealt a harsh blow when a judge ruled in favor of insurer MBIA , stating that the bank would be required to repurchase securities even if they were not in default. MBIA would only have to prove that the securities were faulty, but not that the bank’s underwriting was defective, leading to the faulty mortgage-backed securities.

Yesterday’s improvements were largely due to Bank of America’s tally in the win column following the release of new global investment fees data. Overall fees rose by 6%, but B of A bested both JPMorgan and Goldman Sachs in fee income for the first quarter of this year.

Bank

Q1 2013
Investment Banking Fees
Bank of America $1.52 billion
JPMorgan Chase $1.48 billion
Goldman Sachs $1.27 billion

Source: Thompson Reuters.

Today’s rally may have a little something to do with the bank’s increased focus on customer service. Though the bank continues to be at the bottom of the barrel in terms of customer satisfaction, it has been making an effort to change some of its consumer-facing traits. Today, the bank announced it would be adding real-time teller chat abilities to a portion of its ATM fleet. The move is designed to allow customer struggling with a transaction to troubleshoot with a real person. The ATMs will now also allow customers to cash checks for the full amounts (including change), choose the denominations desired for cash back, and some other transactions that were not previously supported by traditional machines.

Inside the bank’s branches, there will be some updates as well. New lounge areas will be created in the branches, and iPads will be available for customer use. The traditional branch setup, with products being pushed onto customers, hasn’t been working, according to the bank, and the new one aims at creating a more consultation-type feel to banking interactions. If the bank can improve its customer service, as well as reduce its legal exposure, there is plenty of room for its stock to grow. Happy customers will lead to happy investors. 

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical …read more

Source: FULL ARTICLE at DailyFinance

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Lawsuits: Bruce Berkowitz's Secret Sauce?

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By Jessica Alling, The Motley Fool

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Bruce Berkowitz is undoubtedly one of the most respected value investors in the game; when he makes a move, people pay attention. But it’s hard to ignore one common factor shared by some of his top holding — outstanding lawsuits. With all of the uncertainty surrounding the potential costs of these legal battles, it’s no wonder share prices are depressed, but is Berkowitz investing because of, or in spite of the lawsuits? Let’s take a look at the two biggest cases at hand and see how investors, like Berkowitz, should approach companies with legal battles in the future.

Two-for-one
Bank of America is the No. 2 holding for Berkowitz’s Fairholme Fund. Not only have Fairholme and Bruce had to weather the storm from BAC’s Countrywide legacy issues, but also the more recent spat between the bank and another Fairholme holding, MBIA . The insurer had a big win earlier this week when an appeals court ruling stated that the bank would be required to buy back securitized loans even if they were not in default. The ruling, which partially overturned a lower court ruling, noted that as long as MBIA could prove that the loan “materially and adversely” affected its interest, B of A would be required to repurchase the loan. The court panel also approved MBIA‘s rights to recover “rescissory damages,” which was previously denied by the lower court ruling.

As expected, Bank of America intends to appeal the case since it would set a precedent for other insurers to sue for the same reason. The bank’s most recent SEC filing stated that its current legal reserves for mortgage buyback losses would not be sufficient if the court ruled in favor of MBIA, leading investors to worry about its ability to cover legal losses in the future.

As if one wasn’t enough
Another notable insurer is also seeking to recoup losses from mortgage-backed securities sold by Countrywide and Merrill Lynch (both part of the current B of A) — AIG . As the Fairholme Fund‘s top holding, AIG enters the fray with a big incentive to win in court — $10 billion. But any progress in the case has been derailed as the parties try to determine if AIG has the right to sue in the first place. The securities were bought as part of the NY Fed’s bailout of AIG, which B of A argues assumed the rights to sue when ownership changed hands. Though the Fed previously stated that it did acquire the rights, and AIG was out of luck, a recent statement from a Fed employee reversed that, saying that his previous comments were not meant to take anything away from AIG. Only time will tell how this suit plays out, but either way, one of Berkowitz’s biggest holdings is going to lose.

How to evaluate a company’s …read more

Source: FULL ARTICLE at DailyFinance

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Bank of America Stock Whipsaws on Mixed News

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By John Maxfield, The Motley Fool

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Shares of the nation’s second largest bank by assets, Bank of America , have whipsawed today as investors and analysts struggle to digest a bevy of important news this week, both good and bad.

On the positive side, we learned today that global investment banking fees rose 6% in the first quarter according to data from Thomson Reuters. This amounted to the strongest start in two years. B of A had a particularly strong showing, beating out both JPMorgan Chase and Goldman Sachs in terms of revenue. For the first three months of the year, its investment banking operations earned $1.52 billion in fees compared to JPMorgan’s $1.48 billion and Goldman’s $1.27 billion.

Earlier in the week, moreover, it was announced that B of A has settled with the National Credit Union Administration, setting aside claims related to the alleged sale of faulty mortgages. As I noted at the time, the agreement marks a small but nevertheless important victory because it further lifts the cloud of legal uncertainty off the bank.

But on the other side of the equation, investors learned two days ago that an appeals court ruled against B of A in its legal battle against bond insurer MBIA . The protracted case has been going on for nearly five years, and the momentum has lately swung in MBIA‘s favor. After the ruling, the struggling bond insurer no longer has to prove that B of A’s defective underwriting caused mortgages to default. To be entitled to damages now, all it must show is that the underwriting process was, in fact, faulty and that B of A (or more accurately, Countrywide Financial, which the bank regrettably purchased in 2008) concealed this. To read more about this, click here.

Finally, B of A continues to perform abysmally on the customer service front. The recently created Consumer Financial Protection Bureau released its accumulated list of complaints against the nation’s largest banks this week and, not surprisingly, B of A topped the charts (and not in a good way). In an effort to reverse this reputational damage, and to promote cross-selling of its multiple financial products, CEO Brian Moynihan is corralling the lender’s regional managers for a two-day conference in Chicago. Whether he’s successful, of course, remains to be seen.

Want to learn more about Bank of America?
Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

…read more

Source: FULL ARTICLE at DailyFinance

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3 Things Bank of America Must Do Before Next Year

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By Amanda Alix, The Motley Fool

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It’s common knowledge that Bank of America doubled its stock value last year and achieved several milestones — such as putting many stewing lawsuits behind it, plumping its capital cushion, and reducing the number of delinquent mortgages on its books.

Much work needs to be done, however, and it’s not difficult to come up with several things that B of A would do well to concentrate on this year. Here are three really big issues that I feel the bank should try to put to bed before the end of 2013.

Earnings must grow
This is a bit of a sore spot for Bank of America, particularly because of its retraction from the mortgage market after Countrywide blew up. As peers Wells Fargo and JPMorgan Chase can attest, the mortgage business has been booming, and they have profited handsomely, unlike B of A.

CEO Brian Moynihan has had this issue on his mind for some time. Back in 2011, he predicted that the bank would be producing pre-tax earnings in the $35 to $40 billion range once things got back on an even keel. That was quite a call, considering the fact that the bank only saw $32 billion in the go-go days of 2006. Last year, B of A had pre-tax income of $4.19 billion, so there’s obviously quite a bit of ground to cover.

But, fear not. Mr. Moynihan is right now rallying the troops, nudging them to step up the earnings pace, perhaps pushing his executives to increase cross-selling — something at which rival Wells Fargo excels.

Improvements are needed in its mortgage-servicing division
Bank of America has never had a great reputation for customer service, and it’s even worse when it comes to servicing mortgage loans. The bank has the lion’s share of complaints in this regard, thanks to Countrywide. The bank is working hard to put these issues in the past, and it has given nearly one-quarter of its aggrieved customers some relief, more than any other big bank. Nevertheless, B of A should speed up this process if it is humanly possible, since this particular problem weighs the heaviest on its image.

B of A should settle with MBIA
As I’ve noted before, this issue, which should be minor in the scheme of things, has been blown all out of proportion. Bank of America’s strange refusal to settle this old problem with the much-smaller mortgage insurer MBIA has turned into a slapping contest, making B of A look somewhat like a bully.

Bank of America is one of only two banks that haven’t settled various issues with MBIA, and recent court rulings are making a settlement look like the best resolution for the bank. Early in March, a judge ruled against the bank’s attempt to stop the insurer’s restructuring of its business. Just this week brought another ruling against B of A, this time regarding repurchasing loans it securitized — …read more

Source: FULL ARTICLE at DailyFinance

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Bank of America Gets Slapped by Appeals Court

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By John Maxfield, The Motley Fool

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It’s safe to say Bank of America has seen better days. Besides the abysmal performance of its shares this afternoon — they’re down more than 3% as I write — the nation’s second largest bank by assets received an unwelcome kick in the trousers courtesy of the New York court of appeals.

The ruling is part of a long-simmering dispute between the bank and mortgage-bond insurer MBIA . In short, MBIA claims that B of A (or, more accurately, Countrywide Financial, which B of A acquired in 2008) duped it into insuring a slew of multi-billion dollar mortgage-backed securities that were collateralized by faulty mortgages. B of A said it didn’t, or rather, that even if it did, it shouldn’t have to compensate MBIA for all of the claims the latter paid out to holders of the disputed MBSes.

The case was in front of the appeals court after B of A challenged a number of the trial court’s rulings. The most important of which was a holding that MBIA didn’t have to prove that defects in the mortgage origination process had led borrowers to default on the loans — this issue is known as “loss causation.” What B of A has been arguing all along is that most of the mortgage defaults over the past few years were caused by the economic downturn and not by any alleged deficiencies in the origination process. Suffice it to say, if this theory were adopted by the court, B of A’s damages would be significantly less.

A second but similarly critical issue is whether or not B of A need only repurchase loans from MBSes insured by MBIA if the loans are in default. MBIA claims that the bank must repurchase all loans that were originated in a defective manner regardless of their current status. It’s B of A’s position, on the other hand, that it should only be required to repurchase defectively underwritten mortgages that are already in default.

While the maximum damages in this particular case are easily digestible by B of A — they’re purported to be upwards of $3 billion — the problem is that adverse rulings on issues like these could influence judges in other cases involving analogous claims against the bank. And those cases, mind you, could expose B of A to literally tens of billions of dollars in additional damages. In fact, as Reuters’ Allison Frankel recently discussed, two federal judges have already cited the MBIA case for precedent that so-called monoline insurance companies like MBIA need not establish a causal link between underlying loan defects and defaults.

This is why yesterday’s ruling in MBIA‘s favor on both of these issues probably wasn’t wildly celebrated by B of A’s executives. On the loss causation issue, the appeals court affirmed the lower court without discussion. This makes it pretty clear that banks can no longer “point to external factors like the housing bust to excuse deficiencies in …read more
Source: FULL ARTICLE at DailyFinance

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Why Investors Need Facebook, and Today's Other Big Financial Stories

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By John Maxfield, The Motley Fool

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So you thought Facebook was just for the youngins? Not according to the Securities and Exchange Commission. Read about this and the other stories influencing financial stocks today.

1. It’s time to Facebook friend your stocks
In a ruling issued yesterday, the Securities and Exchange Commission (click here for the ruling itself) held that companies can use social media sites such as Facebook and Twitter to disseminate material nonpublic information to investors so long as the companies have told investors which outlets they use. The issue came up last July after Reed Hastings, the chairman and chief executive officer of Netflix , posted on Facebook that the company had streamed more than one billion hours in the previous month for the first time in its history. Here’s Hastings’ original post:

Congrats to Ted Sarados, and his amazing content licensing team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When House of Cards and Arrested Development debut, we’ll blow these records away. Keep going, Ted, we need even more!

2. Bank of America’s ongoing battle with MBIA
The legal death match between Bank of America and mortgage bond insurer MBIA completed another round yesterday after an appeals court ruled in the latter’s favor on a number of critical issues. The principal question before the court was whether B of A is only obligated to repurchase mortgages that have already gone into default. According to the court, the answer is no: “Plaintiff is entitled to a finding that the loan need not be in default to trigger defendants’ obligation to repurchase it. There is simply nothing in the contractual language which limits defendants’ repurchase obligations in such a manner.”

The court also upheld the lower court’s ruling that MBIA need not demonstrate a “direct causal link” between alleged misrepresentations by Countrywide Financial (which B of A purchased in 2008) and the degradation in value of mortgage-backed securities insured by MBIA. The implications of this ruling are wide-ranging. To read more about this, check out Reuters’ Allison Frankel’s take on it here.

3. Bank of America concludes settlement with the NCUA
In slightly better news for B of A, the National Credit Union Administration announced yesterday that it will drop legal claims against the bank in exchange for a $165 million payment. Not unlike MBIA, the NCUA had alleged that the bank “downplayed risks of poor-quality mortgages packaged into securities” that were then sold to credit unions around the country. As I discussed here, this marks a “small but important victory” for the bank in its efforts to atone for the sins of Countrywide. To learn more about B of A’s progress on the legal front, check out this in-depth series that we published in February.

4. Wells Fargo’s complete domination of the mortgage market
This is more …read more
Source: FULL ARTICLE at DailyFinance

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Bank of America Is Up Today and Could Go Higher

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By John Maxfield, The Motley Fool

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Shares of Bank of America are up considerably this afternoon amid a broader rally that’s sent blue-chip stocks to record highs in intraday trading. With roughly two hours left in the trading session, the nation’s second largest bank by assets is up by $0.23, or 1.97%.

B of A’s ongoing legal battles
The ongoing legal battle between B of A and bond-insurer MBIA made headlines yesterday after a federal judge in New York dismissed B of A’s challenge to MBIA‘s corporate bifurcation. The ruling affirmed an approval by state insurance regulators with respect to the 2009 restructuring. MBIA‘s share soared more than 20% on the news yesterday, and despite the adverse decision, B of A’s ended the day higher as well.

The ruling didn’t impact B of A because the case is a mere sideshow compared to its larger and more substantive legal problems. Since the financial crisis, the bank has paid out more than $40 billion in legal claims related primarily to its acquisition of Countrywide Financial. In addition, according to my estimate, it still has between $15 billion and $25 billion to fork out beyond allocated provisions before all is said and done.

Critically, however, the now-dismissed case didn’t fall into either of these categories. In a rare occurrence, the bank was actually the plaintiff looking for relief as opposed to a defendant from which relief is sought. As a result, the legal loss didn’t necessarily translate into a financial one as well. Not to mention, B of A has promised to appeal the ruling and still has an analogous case pending before a state judge in New York.

The stress tests results are due out this week
Going forward, moreover, investors and analysts are much more interested in what happens at the end of this week. On Thursday, the Federal Reserve is scheduled to release the results of the 2013 stress tests covering the nation’s largest banks including JPMorgan Chase and Wells Fargo , among others. While there’s little question that either of these banks, or B of A for that matter, will pass the tests, there’s less certainty over what that means.

The bigger issue is whether or not the Fed will allow certain lenders to increase their dividends and/or share buybacks. I’ve made no secret of my belief that Wells Fargo will get the requisite go-ahead, but B of A isn’t as sure of a shoo-in. Either way, however, we’re set to find this out at the end of next week when the Fed informs banks of its decision.

B of A reveals new credit card
In other news, The Wall Street Journal reported yesterday that B of A is marketing a new credit card designed to attract credit card customers who carry balances from month to month. The new card, known as the BankAmericard Better Balance …read more
Source: FULL ARTICLE at DailyFinance

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5 Finance Tips the Rich Shouldn't Ignore

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By Dan Caplinger, The Motley Fool

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Most financial advice is geared toward people who are struggling to reach their financial goals. But if you’ve already reached your goals, what should you do next?

The assumption that many people make is that if you hit some magic number with your net worth, you’ll be able to stop worrying about money and simply coast off your assets for the rest of your life. Yet if you take that attitude, you could miss out on some opportunities that could not only make your qualify of life better but also benefit your loved ones for generations to come. Take a look at these five tips and consider whether and how they match up against your personal values.

Tip 1: Take care before boosting your expectations.
The tough thing about setting long-term financial goals is that by the time the long run rolls around, your expectations may be completely different. So if you’ve been fortunate enough to meet your initial goals successfully, the temptation to reach higher for more ambitious wealth goals can be hard to resist.

For instance, in the mid-2000s, stocks had largely recovered from the tech bust, and old-economy stocks were thriving. In particular, homebuilders Hovnanian and Beazer Homes had taken advantage of the soaring housing market to reach all-time highs. Related financial companies also did well, with title insurer Old Republic International and mortgage insurer MBIA having gained from housing activity.

Investors who rode those stocks higher faced a choice in 2006 and 2007: Scale back to lock in gains or double-down to seek a more luxurious lifestyle. Those who were aggressive ended up right in the middle of the market meltdown. The lesson: If the reasons for your initial goals are still valid, don’t put your life savings at risk unless you have legitimate new goals to pursue.

Tip 2: Consider whether you’re the giving type.
Rich people struggle with whether to leave wealth to their heirs. Although self-made millionaires like the idea of their children and grandchildren not having to start at the bottom, they also don’t want to quash the natural ambition their descendants have.

One good compromise is to give in tax-smart ways. For instance, gifts for education don’t incur gift tax as long as they’re made directly to the college or other institution. Also, by giving appreciated stock to loved ones in low tax brackets, you may be able to save on capital gains taxes.

Tip 3: Kill two birds with one stone.
If you like to give money to charity but also want to provide income for yourself or your loved ones, then a charitable trust may be the right answer for you. With a charitable remainder trust, you can donate appreciated stocks and other investments to the trust, with provisions to pay chosen beneficiaries a certain amount or percentage of the trust assets each year. Whatever’s left when those beneficiaries pass away …read more
Source: FULL ARTICLE at DailyFinance

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More Good News for MBIA?

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By David Hanson, The Motley Fool

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The game of legal cat-and-mouse between MBIA and Bank of America shifted today in favor of the Armonk, New York-based financial guarantee insurer.

In a rare scenario in which B of A was not the accused, a New York Supreme Court judge silenced the cries of multiple banks, including B of A, over MBIA‘s decision to bifurcate and restructure its business between municipal bonds and mortgage-backed securities in 2009. The banks claimed that the asset transfer was unfair because it left the entity exposed to deteriorating MBSes underfunded. The judge’s decision was critical for MBIA as the pending ligation against it was hindering opportunities in the municipal markets. S&P recently cut its credit rating to junk.

The market knows a good legal decision when it hears one. MBIA‘s stock soared immediately after the decision was made public. While MBIA investors unquestionably cheered the decision, Bank of America and its investors were once again on the wrong end of a litigious situation. Although this ruling does not have any bearing on the other ongoing lawsuits between MBIA and B of A regarding alleged material misrepresentation by now bank-owned Countrywide’s past mortgage operations, it should give MBIA slightly more leverage during any settlement negotiations because the company is no longer in a dire operational situation.

Given B of A’s disclosure last week that the New York attorney general was jumping on the bandwagon of those claiming malfeasance by legacy Countrywide, the likelihood of a settlement seemed to have increased. Brian Moynihan and team have the ability to essentially close both cases with a settlement because the New York attorney general’s case would be severely damaged without the legal proceedings that would become available if Bank of America and MBIA were to head to the courtroom. B of A investors did not seem to put much weight on the judge’s decision as shares rallied from negative territory to finish higher on the day.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy, and as an added bonus, you’ll receive a full year of FREE updates and expert guidance as key news breaks.

var FoolAnalyticsData = FoolAnalyticsData || []; …read more
Source: FULL ARTICLE at DailyFinance

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Did MBIA Get the Upper Hand on B of A?

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By Matt Koppenheffer and David Hanson, The Motley Fool

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Last week, the New York Attorney General disclosed that it would be investigating securitization and underwriting practices by Countrywide, which was acquired in 2008 by Bank of America . In this video, Motley Fool financial analysts Matt Koppenheffer and David Hanson discuss why this may push BAC to settle in its lawsuit with MBIA . MBIA claims that Bank of America still owes the company billions over bad mortgages that it wants the bank to buy back; allowing the case to continue might strengthen the Attorney General‘s case against BAC. Matt and David also talk about the dire straights MBIA is facing financially, and why this settlement might be life or death for the company. 

Many investors are also hoping to see Bank of America settle, and move one step closer to putting its legal troubles behind it. Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool‘s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy, and as an added bonus, you’ll receive a full year of FREE updates and expert guidance as key news breaks.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Matt Koppenheffer and David Hanson”, contentId: “cms.21281”, contentTickers: “NYSE:BAC, NYSE:MBI”, contentTitle: “Did MBIA Get the Upper Hand on B of A?”, …read more
Source: FULL ARTICLE at DailyFinance

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Stocks Make Gains Despite China Scare

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By John Maxfield, The Motley Fool

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Stocks appear to have recovered from a case of the Mondays. As my colleague Dan Caplinger noted this morning, the broader market has fallen during every Monday session this year — until today. As of 2:45 p.m. EST, the Dow Jones Industrial Average is up 30 points, or 0.21%.

Notably, the Dow has bounced back from an earlier decline that followed worrisome news out of China. At the end of last week, the country’s governing body, the State Council, announced a series of heightened regulations impacting the sale of real estate. Home sellers will now be obligated to pay 20% in taxes on the profits from home sales. In addition, as fellow Fool Dan Dzombak discussed earlier, the government will enforce higher down-payment requirements and increased mortgage rates on second homes.

These measures are designed to curb ongoing speculation in the real-estate market. According to a Chinese real-estate agent quoted by The Wall Street Journal: “Home prices will definitely take a hit once the new regulations are in place. In previous rounds of tightening, investors typically took around six months to see how the market is reacting to the new rules.”

Here on the domestic front, shares of Caterpillar and Alcoa are leading the Dow lower, down 1.9% and 1.1%, respectively. Both of these companies are heavily tied to real-estate activity in the major economies, as Caterpillar manufacturers construction equipment and Alcoa supplies materials.

Shares of Bank of America are also down today after a federal judge in Manhattan dismissed a lawsuit the nation’s second-largest bank had filed against mortgage-bond insurer MBIA . The lawsuit concerned MBIA’s decision to cleave its bond insurance unit off of the rest of its operations in order to quarantine the losses therein.

Finally, Wal-Mart is the best-performing component of the blue-chip index, up 1.7% in afternoon trading. According to internal emails, the company has struggled of late due to lagging demand. Wal-Mart was one of four Dow stocks that Dan Caplinger implored readers to watch this March, saying, “Leaked internal emails among Wal-Mart executives referred to ‘disastrous sales’ for the beginning of 2013, and that prompted the company to temper its guidance for the current quarter.” For this reason, “you’ll want to watch closely for any further guidance from the retailer about the current quarter, especially as pressure continues to build on lower-income customers.”

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why MBIA Shares Jumped

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By Jeremy Bowman, The Motley Fool

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Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of insurance provider MBIA jumped as much as 25% today after it won the dismissal of a long-standing lawsuit from Bank of America .

So what: The Supreme Court of New York upheld an earlier decision that said the company’s 2009 restructuring plan was legal, dismissing the allegations from B of A and Societe Generale. The two banks were left over from 18 that had originally sought a reversal of the restructuring approval, accusing MBIA of committing fraud in the process. The suit had weighed on MBIA‘s shares in the recent past as a favorable result for the plaintiffs would have been damaging for the insurer. CEO Jay Brown said he was “pleased” that the court had affirmed what he believed was obvious all along.

Now what: Today’s result represents a big step for MBIA, but it’s still facing litigation in other areas. MBIA‘s principal business is insuring municipal bonds, and the company should improve along with the overall financial sector, which has been among the best performers this year. Today’s news should only strengthen the investing thesis for MBIA.

Want more on MBIA? Add the company to your Watchlist by clicking right here.

The article Why MBIA Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance