WSJ – When MBIA Inc. and Bank of America Corp. agreed in May to settle a four-year-old lawsuit, traders at GSO Capital Partners erupted in cheers.
The agreement gave the New York hedge fund owned by Blackstone Group LP a $100 million profit plying one of Wall Street’s most-contentious trades since the financial crisis: whether MBIA, an Armonk, N.Y., bond-insurance company, would emerge intact from a cash crunch dating back to the U.S. housing bust and a related legal battle involving 18 banks and New York’s insurance regulator.
