on conference call MBI said "no assurance they will meet raised capital requirments by rating agencies in the future if it doesn't make economic sense" Sounds like ABK. Not Pretty.
Market seems to asleep to the fact that FGIC has now been downgraded by two rating agencies . I assume that now banks will need to writeoff holdings and municipal bonds will have to be sold by funds that hold "aaa only" bonds. $315 billion in insured bonds by FGIC - #3 bond insurer. More dominos falling. Seems like the horse is out of the barn. S&P Cuts FGIC AAA Rating Thursday January 31, 4:30 pm ET Standard & Poor's Downgrades FGIC, Imperiling the Value of $315 Billion in Debt NEW YORK (AP) -- Standard & Poor's Ratings Services slashed Financial Guaranty Insurance Co.'s financial strength rating on Thursday, further imperiling the value of hundreds of billions of dollars in debt the bond insurer protects. S&P cut FGIC's financial strength rating to "AA" from "AAA." A bond insurer with a rating below the top-notch "AAA" designation will have trouble competing with other insurers for new business. The downgrade comes a day after Fitch Ratings cut the bond insurer's rating, saying the company's capital shortfall had swelled to $1.3 billion. S&P said FGIC's plan to raise cash "does not fully address projected losses." With $315 billion in insured debt, FGIC writes policies promising to repay bondholders when bond issuers default. As the market value of some of the riskier debt FGIC guarantees plummets, concerns have mounted about more claims from defaulted bonds. FGIC's contracts lost more than $100 million in value during the third quarter. FGIC is owned by the mortgage insurer PMI Group Inc. and private equity firms Blackstone Group LP, Cypress Group and CIVC. The downgrade implies that bonds insured by FGIC are only as safe as the insurer's now-weakened capital strength. After Fitch downgraded Ambac Financial Group Inc. this month, the ratings agency downgraded 140,000 municipal bonds insured by the company. After downgrading Security Capital Assurance Ltd., which insures $150 billion in debt, Fitch downgraded 37,541 SCA-insured bonds.
LOL wow....equity traders are a slow group of people. I almost cringe every time I hear them talk about this on CNBC. Can't believe they're ignoring this.
citigroup took the trophy for crooks of the day. they upgraded ABK, the analyst probably had a gun on his head all morning
Moody's announces rating actions on mortgage insurers PMI - Aa2 ratings placed on review for possible downgrade MGIC -- Aa2 ratings remain on review for possible downgrade Radian -- Aa3 ratings remain on review for possible downgrade http://www.moodys.com/moodys/cust/r...&doc_id=2007000000472731&frameOfRef=corporate
The more you read the more you realize how far away a solution is. MBIA CFO questions one bailout idea 'Good bank/bad bank' plan is tricky; other ideas discussed with regulators By Alistair Barr, MarketWatch Last update: 7:14 p.m. EST Jan. 31 SAN FRANCISCO (MarketWatch) -- A "good bank/bad bank" plan to salvage the $2.4 trillion bond-insurance business would be tricky to pull off, MBIA Inc. Chief Financial Officer Chuck Chaplin said Thursday. Some transactions in the insurance industry have managed to "ring fence" one part of a company and isolate it from the rest of a firm's business, he commented during a conference call with analysts and investors after MBIA reported a $2.3 billion quarterly net loss earlier in the day. However, there would be many hurdles to creating an effective "good bank/bad bank" structure in an insurance-company setting, he warned, noting that a lot of the ideas currently circulating on how to bolster the bond-insurance industry wouldn't pass muster with influential ratings agencies. "We don't want to turn that valuable idea away, but it has a lot of hair on it," Chaplin said during the call. It would be "possible, but very difficult." 'We don't want to turn that valuable idea away, but it has a lot of hair on it.' â Chuck Chaplin, MBIA Still, Chaplin and MBIA Chief Executive Gary Dunton stressed that the company continues to work on ways to boost capital levels, and is keeping regulators including the New York Insurance Department up to date on its plans. "We are very interested in having that dialog with the state and other participants," according to Chaplin. "There are other plans we're working on," Dunton said. "We look forward to discussing this with regulators in future." Bond insurers like MBIA and rival Ambac Financial Group have been hit hard by the mortgage crisis. There's now concern that they'll have to pay big claims from guarantees they sold on complex mortgage-related securities known as collateralized debt obligations, or CDOs. Several bond insurers have begun to lose AAA ratings, imperiling their business models. Concerns about the wider impact of trouble in the business have encouraged some regulators to begin working on a possible bailout. The New York Insurance Department, headed by Eric Dinallo, hired boutique investment bank Perella Weinberg this week to help it address problems in the industry. See full story. Earlier in January, Dinallo met with some of Wall Street's largest investment banks. Some of these brokerage firms have hedged CDO exposures by buying guarantees from bond insurers, so they have an interest in stabilizing the business. If lots of bond insurers are downgraded or if some collapse, these banks may suffer more write-downs. See full story. Several ways to stabilize the bond-insurance business were discussed at the meeting. One involved banks injecting up for $15 billion into bond insurers, but some analysts have questioned that plan. See full story. The "good bank/bad bank" plan was also discussed, although only as a last-ditch option to salvage the municipal-bond market in the face of severe bond-insurer stress, a person familiar with the regulatory discussions said Thursday. Such a plan may involve separating the steadier muni-bond businesses of leading bond insurers from their riskier, structured-finance businesses, which are exposed to potential losses from CDOs and other troubled securities. The muni-bond portfolios of these companies could then be reinsured, freeing up capital that could be used to pay expected claims hitting the structured-finance business. But such a plan may face opposition from current shareholders of Ambac and MBIA, because they wouldn't want the companies to relinquish their prized muni-bond businesses. Indeed, regulators and others involved in the discussions are currently favoring a less draconian approach, in which deals are struck between individual bond insurers and their main counterparties, the person said, on condition of anonymity. Indeed, that's already the approach being used with ACA Capital , a bond insurer that saw its rating slashed to junk status late last year. ACA said in January that counterparties, including Merrill Lynch & Co. , CIBC and French bank Credit Agricole (FR:004507: news, chart, profile) , waived all collateral-posting requirements, termination rights and policy claims relating to the credit rating of its bond-insurance unit ACA Financial Guaranty. The forbearance pact lasts until midnight on Feb. 19. ACA said that it's working closely with its counterparties to come up with a permanent solution to its problems.
Friday night massacre anyone? I think if they are going to downgrade MBIA they will do it after the markets close, and probably after COB on a Friday evening. Tonight would be perfect, with the Superbowl on Sunday.
I just find hilarious when all the criticism mbia staff can give to bill ackman is that he is a 'self-interest party that wants to profit from a stock decline'. well what about them?he is no more self-interested than the CEO or CFO who wants to profit by saying everything is rosy. marty whitman is another scum who is self-interested yet tries to give the idea that his some kind of hero saving a company when all he is interested in on the money. even dinallo is self-interested, he needs to keep his job and bail them out, who the hell isn't. when asked about ackman's model they utter some nonsense about not knowing who is the 'global bank behind it' and dont make a single direct criticism of the model
Well know we now who's holding the big losses. Eight banks seek rescue plan for bond insurers: CNBC Fri Feb 1, 2008 8:30am EST Email | Print | Share| Reprints | Ambac and MBIA shares rise on CNBC report NEW YORK (Reuters) - Eight banks have formed a consortium to seek a rescue plan for MBIA Inc (MBI.N: Quote, Profile, Research), Ambac Financial Group Inc (ABK.N: Quote, Profile, Research) and other troubled bond insurers, CNBC said on Friday, citing an unnamed source. The eight banks include Barclays Plc (BARC.L: Quote, Profile, Research), BNP Paribas (BNPP.PA: Quote, Profile, Research), Citigroup Inc (C.N: Quote, Profile, Research), Dresdner (ALVG.DE: Quote, Profile, Research), Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research), Societe Generale (SOGN.PA: Quote, Profile, Research), UBS AG (UBSN.VX: Quote, Profile, Research) and Wachovia Corp (WB.N: Quote, Profile, Research), CNBC said.
Moody's to Complete Review of Bond Insurers By Late February By Mark Pittman Feb. 1 (Bloomberg) -- Moody's Investors Service said it will complete its reassessment of the bond insurance industry by mid- to late February and may downgrade some companies before then if they can't raise capital. ``Our estimate of capital needed to support the mortgage- related risk of some guarantors has risen significantly,'' Moody's analysts led by Stanislas Rouyer said in a report dated yesterday. MBIA Inc. and Ambac Financial Group Inc., the world's largest bond insurers, reported a combined loss of $5.5 billion in the fourth quarter after a slump in the value of their guarantees on subprime-mortgage securities. Moody's said it may cut both the companies' AAA credit ratings. The loss of the AAA ranking may cause losses of as much as $70 billion for the world's banks, Oppenheimer & Co. analysts said. Moody's said it is revising its view of the bond insurance industry after increasing its prediction for losses on subprime mortgage securities. The ratings company won't wait to finish the industry assessment before downgrading. ``We are likely to take rating action sooner than that in at least some cases, however where needed capital raising appears in doubt,'' Moody's said in the report.