JKirk

Rating Agencies Target Guarantors to Deflect Subprime Blame

Really, what ABK/MBI suffer from is that they don't control their business model. It relies on a AAA rating from the rating agencies and they didn't have a contractual goal post for maintaining that rating. They thought they just had to have reserves that fulfilled the Moodys/S&P models, but have found out those models... however long they've been in effect previously, can be changed 3 times in a six-month period due to fear. I don't know if ABK/MBI will remain going concerns, but in run-off they seem to be worth multiples of their current stock price... and there are of course lots of talented/experienced people there available to start new financial guarantor companies.

The Great Monoline Debate Goes to Washington

A well written and logical argument regarding the monolines. There have been few, far-between on SA. I have heldd the opinion that the claim-paying resources are adequate, but am still fearful that Ackman et al can attack the MBIA/ABK structure, that is kill the holding companies via regulators or agency actions. While the policyholders remain safe, the debt and equity holders are left with nothing.

A Common Sense Look at MBIA

**Why didn't Mr Buffett attempt to acquire the entire firm?
He pretty much just did- the part he wants, at a ridiculous price. I'm also reminded by the phrase, "Why buy what you can kill?"

**Why haven't any international or domestic firms acquired the firm?

I flipped through January and February SEC filings and on a round number basis you can get to about 2/3rds of MBIA is owned by about 8 entities- so, they've bought a bunch. It may get hard to cover a short position, actually.

**Why are they unable to raise a proper amount of capital to ensure liquidity and financial security? With the way the USD has been acting we should be seeing international firms pouring money into MBIA if there's no significant danger.

MBIA is up to about $US 2.65B in capital it raised. Every time a rating agency increases the AAA threshold, they exceed it... then the rating agencies change their mind. And they don't question the ability for the insurers to cover claims, except in a very, very, very depressed scenario... to which they even then add a premium.

**2. If Ackman's firm's analysis is even somewhat correct and MBIA is in trouble then...

Ackman's focus seems to be that he can short the ABK and MBIA holding companies via stock/options/CDS and create enough panic to get regulators to suspend the premiums being collected from the underlying insurance companies to the holding company parent. This would result in the insurance companies continuing to exist in a run-off situation while the holding companies go bankrupt. If this occurs and the insurance policies expire over the next 40 years with no insurance payment defaults, history may look back at Ackman as one of the greatest conmen ever.

MBIA & Ambac: Wow!

Cherry picked questions for the call? Give me a break. After a 2 hour management presentation they read and answered questions submitted beforehand, and during the call via email, for another 2 hours. That included Ackman's questions... I checked them off, one by one. While Ackman may be successful at killing the holding companies, who's arguing that the insurance companies are going to defualt? Nobody. And in my opinion, the only reason you'd want to keep hammering these companies after they're down over 80% is that you're also short the chain of financial institutions that fall next in the domino effect. If those dominoes do fall, I hope all the short-sellers profits can re-invigorate our economy of the of the recession lock-jam it'll be suffering.