Feb. 7 (Bloomberg) — Detroit won't take legal action for now against Bank of America Corp. and UBS AG over a costly swaps deal, even after canceling a forbearance agreement it reached with the banks in July.

While they continue trying to negotiate an end to the swaps, which cost taxpayers about $4 million a month, the city and the banks will refrain from taking court action against each other, according to Bill Nowling, a spokesman for Detroit's emergency financial manager, Kevyn Orr.

"We basically have a gentleman's agreement," Nowling said in an interview yesterday after the city told U.S. Bankruptcy Judge Steven Rhodes it canceled the forbearance deal on Jan. 31.

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