sulli5

On the Monolines: Brown vs. Tilson, Round 2

Great post Mr. Brown. Tilson does not get it and it is very simple. Moody's and S&P said that MBIA needed more capital to keep it's AAA. MBIA got more capital to maintain the AAA. They deluded the stock to do it but they felt it was worth it. After the capital raise, both rating agencies reconfirmed the AAA rating. MBIA was playing by the Agencies rules. With the addition capital and the money from runoff MBIA met all requirements for the AAA. The rating agencies are running scared because of their poor record in recent times. They decided to throw MBIA overboard because they feared bad publicity. MBIA raised the money for one purpose and that was to maintain the AAA. When the rating agencies changes the criteria that purpose also changed. MBIA does not need more capital so why should they put up the money when it is not needed but use it for other purposes like buying back stock. Moody's penalized MBIA for holding back the money and in their recent communication indicated that they would not give MBIA new insurer a AAA. It's the rating agencies who should be downgraded which they have been in the court of public opinion