Barbara Desoer

Bank of America Corp. (BAC) has been fighting in a New York court this week to avoid as much as $3 billion in liability for defaulted Countrywide mortgage securities, but the bank's courtroom adversary, bond insurer MBIA Inc. (MBI), is wielding the bank executives' own words in its courtroom attack.In a two-day hearing Wednesday and Thursday, BofA argued it structured its 2008 deal with Countrywide in a way that allowed it to avoid liability for certain Countrywide assets, branded "too toxic" in one internal bank email.MBIA said the deal was in fact a merger in which BofA absorbed 19,000 Countrywide employees, technology and operations to enhance its mortgage capabilities. The insurer introduced videotaped deposition testimony from executives including former Chief Executive Ken Lewis and current CEO Brian Moynihan to bolster its case."The objective was to present a common set of products and a common brand to our combined set of customers," Mr. Lewis said in an April 2012 deposition a...

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