Palmer and other analysts believe Bank of America will ultimately settle the case. Analysts have estimated a settlement will cost Bank of America roughly $2-3.5 billion, though they have been surprised by Bank of America's tenacity in fighting MBIA. MKM Partners analyst Harry Fong, who like BTIG's Palmer recommends MBIA shares, believes Bank of America is fighting so hard because a settlement acceptable to MBIA might "set a bad precedent" for a proposed $8.5 billion settlement between Bank of America and several large institutional investors that is tied up in litigation. Of the legal battle between MBIA and Bank of America, Fong writes, "We could easily paint a picture that shows this case, if it goes all the way to trial, will not reach a final conclusion until the end of 2014 or 2015." A Bank of America spokesman did not respond to questions. An MBIA spokesman declined to comment. -- Written by Dan Freed in New York.