A court of appeals upheld a lower court ruling against ""MBIA's"":http://www.mbia.com/ claim seeking money from ""FDIC's"":http://www.fdic.gov/ sale of IndyMac Bank.
[IMAGE]The insurer filed suit against FDIC and IndyMac Bank in 2009 following the collapse and subsequent sale of IndyMac. In its original complaint, MBIA contended that IndyMac misrepresented loans packaged in securities that were then insured by MBIA. The insurer goes on to argue that because FDIC--acting in its capacity as receiver [COLUMN_BREAK]
--approved the pooling and servicing agreements (PSAs) for the transactions, MBIA's claims for expenses following the collapse of the securities should have priority over other creditors' claims, asserting that its payments to investors qualified as ""administrative expenses.""
Judge Amy Jackson for the U.S. District Court for the District of Columbia disagreed, reasoning that ""the law does not support MBIA's approach, and the receivership otherwise lacks the means to satisfy MBIA's breach of contract claims.""
In their own ""opinion"":http://www.cadc.uscourts.gov/internet/opinions.nsf/E24B8CB7C50C05D985257B280053C7CB/$file/11-5317-1424099.pdf, Judges Karen Henderson, Judith Rogers, and David Sentelle for the ""U.S. Court of Appeals"":http://www.cadc.uscourts.gov/internet/home.nsf (District of Columbia Circuit) also disagreed with MBIA's claim that FDIC approved the PSAs, examining the two parties' debate over what constitutes ""approval.""
""Under MBIA's broad interpretation of 'approved,' mere assumption, oral agreement, or partial performance would accord priority status to any damages stemming from a non-repudiated contract,"" the panel's opinion reads. ""Absent a formal, written sanction by the FDIC of the PSAs for the three mortgage securitizations at issue, MBIA stands in the status of a general creditor.""