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Banned
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ace, read the bottom third of my last post again, starting with the graphic of the chart of the bond insurers, MBIA, et al.... and then read this one, and tell me you still think that you know best....
Quote:
http://www.bloomberg.com/apps/news?p...aB0&refer=home
MBIA Posts Biggest Loss; Considers New Capital Plans (Update1)
By Christine Richard
Enlarge Image/Details
Jan. 31 (Bloomberg) -- MBIA Inc., the world's largest bond insurer, posted its biggest-ever quarterly loss and said it is considering new ways to raise capital after a slump in the value of subprime-mortgage securities the company guaranteed.
The fourth-quarter net loss was $2.3 billion, or $18.61 a share, raising concern the Armonk, New York-based company will lose its Aaa rating at Moody's Investors Service. The loss came a day after FGIC Corp.'s insurance unit became the third company to be stripped of its AAA credit rating.
MBIA is seeking to convince Moody's to retain the Aaa on its insurance unit as Chief Executive Officer Gary Dunton tries to shore up capital through stock and bond sales. Without the Aaa stamp, MBIA would be unable to lend a top rating to new securities, crippling its business and throwing ratings on $652 billion of debt into doubt. The threat of losses prompted the New York State Insurance Department to call a meeting of banks last week to discuss a rescue.
``In the absence of a credible bailout plan, I think investors and issuers need to assume that MBIA, along with all of the other companies, will face continuing, worsening downgrade pressure all year,'' said Matt Fabian, a managing director at Concord, Massachusetts-based consulting firm Municipal Market Advisors....
Last Updated: January 31, 2008 00:56 EST
http://online.wsj.com/article/SB1201...googlenews_wsj
Derivatives Write-Downs Hit MBIA
By LAVONNE KUYKENDALL
January 31, 2008 2:57 a.m.
.....MBIA's fourth quarter derivatives write-down is more than 10 times as large as the $352.4 million write-down it reported in the third quarter, an indication of the rapidly worsening U.S. housing market and its effect on securities backed by loans made to credit-challenged customers.
Of the $3.5 billion charge, MBIA estimated it would realize $200 million of credit impairment or actual claims payments on the portfolio. In addition to the credit impairment on its derivatives portfolio, MBIA also set aside $713.5 million of pretax loss and loss-adjustment expense due to an expected loss of $613.5 million on its guarantees, and a special addition of $100 million to the unallocated loss reserve for MBIA's prime, second-lien mortgage exposure.
Second lien, or home-equity loans, have shown rising losses as home values plunge in some parts of the country.......
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Quote:
http://www.marketwatch.com/news/stor...D8CB2982458%7D
MBIA, Ambac slump on Ackman loss estimates
Bond insurers face much bigger losses, hedge fund manager and critic says
By Alistair Barr, MarketWatch
Last update: 7:01 p.m. EST Jan. 30, 2008
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SAN FRANCISCO (MarketWatch) -- Ambac Financial and MBIA Inc. will lose more money than they're currently predicting from guarantees they sold on complex mortgage-related securities, according to Bill Ackman, a longtime critic of the bond insurance industry who is betting against the companies.
Ambac and MBIA shares fell almost 20% at one point in afternoon trading on Wednesday. The stock market also gave up earlier gains.
Ambac (ABK:
AMBAC Inc
News, chart, profile, more
Last: 10.85-2.08-16.09%
4:03pm 01/30/2008
ABK 10.85, -2.08, -16.1%) will incur losses of roughly $11.61 billion from exposure to residential mortgage-backed securities and collateralized debt obligations (CDOs), Ackman, head of hedge fund firm Pershing Square Capital Management, said in a letter to regulators on Wednesday.
MBIA (MBI:
MBI 13.96, -2.02, -12.6%) will lose about $11.63 billion from similar exposures, he added. MBIA could lose another $928 million if reinsurance the company bought to cover certain CDO exposures from 2007 doesn't pay out, Ackman said.
"Losses to MBIA and Ambac from these exposures are materially higher than suggested by the rating agencies or the bond insurers themselves," Ackman said in the letter, a copy of which was obtained by MarketWatch.
MBIA slumped 13% to close at $13.96 on Wednesday, while Ambac shares fell 16% to $10.85. The stocks fell by almost 20% earlier...
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Let's bail these "Mo Foes", out, so we can keep the window dressing on the crap assets that MBIA and Ambac "Insurance" cover up as AAA rated assets, after all there are only $2.4 trillion in assets tied up in this toxic crap to prop up:
<h3>Now, they're actually going to examine the credit quality of the insured assets, it could have been dog shit, and their shinola scheme would still have rated it all AAA. The holders of it will puke it all up at once, and get pennies on the dollar for it all, when the bond insurers who "protect the rating", but have no effect on the actual quality of the assets, are too big to fail, do fail....</h3>
Quote:
http://www.bloomberg.com/apps/news?p...T7U&refer=home
MBIA, Ambac May Each Lose $11.6 Billion, Ackman Says (Update4)
By Christine Richard and Mark Pittman
Jan. 30 (Bloomberg) -- MBIA Inc. and Ambac Financial Group Inc., the two largest bond insurers, may each lose $11.6 billion on guarantees of mortgage-linked debt and other securities, according to hedge fund manager William Ackman.
``Up until this point in time, the market and the regulators have had to rely on the bond insurers and the rating agencies to calculate their own losses in what we deem a self-graded exam,'' Ackman said in a statement preceding release of the letter. ``Now the market will have the opportunity to do its own analysis.''
MBIA closed down $2.02, or 13 percent, at $13.96 in New York Stock Exchange trading. Ambac dropped $2.08, or 16 percent, to $10.85. Both companies have lost more than 80 percent of their market value in the past year.
Peter Poillon, a spokesman for New York-based Ambac, and Michael Sitrick, a spokesman for Armonk, New York-based MBIA, didn't immediately return telephone messages seeking comment.
Other Estimates
Bond insurer credit ratings are being reassessed on concern by Fitch Ratings, Moody's Investors Service and Standard & Poor's that the companies don't have enough capital to cover losses stemming from downgrades on securities they guarantee. The extent of those losses hasn't been determined partly because of the difficulty in valuing the complex debt instruments involved.
<h2>To determine whether the companies will retain their top AAA rankings, stamped on $2.4 trillion of securities they guarantee, analysts have tried to estimate likely losses on bonds and CDOs.</h2>
In a report last week, New York-based JPMorgan Chase & Co. analysts forecast pretax losses related to residential mortgage securities of $11.4 billion for Ambac and $8 billion for MBIA. S&P said earlier this month that Ambac could lose $1.9 billion after taxes, and MBIA $3.2 billion.
``If we had the same level of data on every deal, we wouldn't have a problem,'' said Christopher Whalen, managing director of Institutional Risk Analytics, which makes software for banks. ``The data would be ground up, the losses would be known and we'd have a functioning market again.''
Downgrades and Bailout
Ambac said Jan. 22 it expects to pay claims on CDOs of $1.1 billion. MBIA said Jan. 9 it will likely report a $737 million expense for the fourth quarter to cover losses related to deteriorating subprime-mortgage securities it guarantees. MBIA is scheduled today to report its fourth-quarter results after the close of regular U.S. equity trading.
Fitch today downgraded Financial Guaranty Insurance Co., the world's fourth-largest bond insurer, two levels to AA from AAA, after the company failed to raise capital. Earlier this month, Fitch also cut Ambac Assurance Corp. to AA from AAA, and Hamilton, Bermuda-based Security Capital Assurance Ltd.'s XL Capital Assurance and XL Financial Assurance five steps to A.
Industrywide downgrades may force sales by investors who are required to hold only the highest-rated securities and cut profit for banks that have already posted $133 billion of writedowns and credit losses tied to the falling value of mortgage securities.
2002 Report
<h3>New York State insurance regulators met Jan. 23 with U.S. banks to discuss raising new capital for bond insurers. Talks in New York with the unnamed banks are part of Dinallo's effort to stabilize the bond guarantors and bolster the market's finances.
</h3>
The New York State Insurance Department wouldn't comment on Ackman's letter, David Neustadt, a spokesman for the agency said.
Bond insurers are paying a price for expanding beyond their traditional business of backing municipal bonds to guaranteeing debt linked to riskier subprime mortgages as well as CDOs, which repackage assets such as mortgage bonds and buyout loans into new securities.
Ackman, who co-founded Gotham Partners LP in 1993, has been critical of MBIA's AAA ratings since 2002, when he wrote a report ``Is MBIA Triple-A?'' New York-based Pershing Square stands to profit if MBIA's and Ambac's holding companies go bankrupt.
In a Jan. 18 letter addressed to the top executives of each ratings company, Ackman said they are underestimating potential losses at MBIA and Ambac by relying on after-tax results, failing to update ratings on reinsurers of bond insurance and ignoring the slide in the commercial mortgage-backed securities market.
In addition to MBIA, Ambac and Security Capital, the other AAA bond insurers are those owned or operated by Assured Guaranty Ltd., CIFG Assurance North America, FGIC Corp. and Financial Security Assurance Inc....
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<h3>So the "rubber" is finally starting to meet "the road". Here is how it worked. Credit rating agencies sold out their fiduciary obligations, as regulator looked the other way. Crap bond assets backed by highly dubious mortgage loans and other "instruments" were "packaged in" with higher quality loan tranches, into bonds that could be shined up as AAA rated. What was there to worry about when this crap could be insured by bond insureres MBIA and Ambac. If these two whores go under, even the pretense of AAA rating on the formerly insured bonds is removed, and the pension, hedge and who knows who FUNDS holding this crap are required in many cases, to sell it if it drops to a lower credit rating or is no longer insured. The solution is for government to prop up the cadavers of busted out bond insurers Ambac and MBIA, to continue to make it appear, on paper anyway...that the $2.4 trillion valuation of these assets, is still $2.4 trillion. Of course, it is all a house of mirrors presented to hold up a house of cards, for a li'l while longer...say...till after the elections???? </h3>
This is how the housing bubble was fueled. All loans made to all borrowers, regardless of their ability to afford their purchases or to repay their loans were shined up as AAA. The money poured in, year after year, and housing and other asset prices were chased up, up, and up. Now it's over, and it will be your granfather's 1932 era depression, redux.
Still skeptical? The Fed just cut it's short term discount rate from 4.25 percent to 3.0 percent, in less than 5 business days, with the 12 month CPI inflation rate at 3.8 percent. The Fed and the president's caninet are shit scared, and the cut the only rate they control, by more than 25 percent in less than a week. If economic activity does not fall off too quickly, watch the price of oil....gold is already back above $925. Who will the Treasury sell $700 billion in this year's federal borrowing requirements to, with these low interest rates, below the offical inflation rate now.
The thread is a nearly a year old, read the posts on the first page, and compare the opinions then, vs. what we observe begining to implode now.
Stock up on canned tuna, beans, and bottled juices, and shop for a home shotgun and a few hundred rounds of shells, down at your WSalmart, just to play it safe !
Last edited by host; 01-31-2008 at 01:04 AM..
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