JPMorgan Chase Bank NA and Barclay’s Bank Plc said they are withdrawing from a lawsuit over New York-based debt insurer MBIA Inc's decision to split its insurance unit in two.
In February 2009, MBIA separated its municipal bond insurance business from its structured-finance guarantees, including those on mortgage-related securities that caused it to lose its AAA credit ratings in 2008. In May 2009, Bank of America Corp., JPMorgan Chase, UBS AG and 15 of the world’s largest financial companies sued MBIA, saying that the split illegally cut their odds of getting paid on structured-finance policies.
The lawsuit will continue for the remaining plaintiffs, according to a filing today with the New York State Supreme Court in Manhattan.
Barclays declined to comment, said Erica Chase, a spokeswoman for the company in New York. Jennifer Zuccarelli, a spokeswoman for JPMorgan in New York, didn’t immediately return a call seeking comment. A call to Kevin Brown, a spokesman for MBIA, wasn’t immediately returned.
MBIA has said it plans to begin insuring municipal bonds again once the litigation over the split concludes. The company hasn’t insured the securities since losing its top rating.