If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
MBIA the large bond insurer posted a nifty $2.4 billion loss for the quarter on the back of losses tied to the mortgage bust. Bloomberg has the full details.
If you are interested in why the bond insurers play such a central role in this mess (and how they are essentially teetering on insolvency) check out this great presentation on MBIA and AMBAC. It goes way in-depth about the problems with the bond insurers.
From the report, this graph below shows how MBIA has reduced cash reserves even as the company continues to be exposed to CDO losses.
As Warren Buffett says about the problems with bond insurers’ business models:
?We see a Baa credit enhanced to a Aaa credit by someone guaranteeing it for a 10-15 basis point charge. Yet, the spread in the market yield might be 100 basis points. Well, that doesn?t strike us as smart. ? I would say that at some point, you can get into a lot of trouble at 140-to-1 insuring credits.?
Last 3 posts by Morgan
- Goldman bonuses largest in firm's 140-year history - June 21st, 2009
- No "green shoots" in employment - June 21st, 2009
- Roubini: Obama banking reforms get it 75% right - June 20th, 2009









Add New Comment
Thanks. Your comment is awaiting approval by a moderator.
Do you already have an account? Log in and claim this comment.
Add New Comment
Trackbacks
(Trackback URL)
May 14, 2008 at 11:56 am
[...] to subscribe to my RSS feed. Thanks for visiting!As we discussed the other day in our post about MBIA’s ...
June 6, 2008 at 7:47 am
[...] you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!AMBAC and MBIA the two ...
September 16, 2008 at 8:31 am
[...] reminds me of a post we did about the mortgage bond insurers (referring to AMBAC and MBIA) back in ...