It's one of the peculiar realities of business: two parties can spend years aiming for one another's jugular vein and end-up partnering when they find cooperation is in the best interest.
That's the way it appears the litigation soap opera between MBIA and Bank of America has ended after they resolved their differences and announced a settlement, ending four years of finger-pointing and personal attacks.
When the housing market imploded in 2008, bringing down the rest of the economy, MBIA, along with FGIC and Ambac, found themselves facing huge losses from insuring credit default swaps (CDS). The CDS covered bundles of mortgages that investors traded as profitable investment vehicles with little risk—so they thought. The players in these investments assumed that mortgage underwriters were writing loans to people who could afford them, and if a couple went bad the bulk of good ones would keep the bundle healthy. But the greed mongers underwrote a lot of bad loans. No one knew how extensive the problem was until the economy tanked.
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