CT Programmer

MBIA Sues Countrywide: Part of the Solution to Clean Up the Lies

The real problem is that you had an industry that, in an effort to chase profits, encouraged mortgage brokers to crank out as much business for as big of a mortgage as possible, and the underwriters were looking the other way because they were just wrapping them up as securities then passing them along. And although I am long MBI, I believe that they too were looking the other way as far as properly analyzing the risk on this stuff. If they priced their wraps too high, no one would buy them. No one planned for a worst case scenario where default rates doubled or tripled. Its not just one slice of the pie that's to blame --- it was the whole thing. Now, if MBI can chase this stuff down in court and recover a little from it, more power to them. But it will drag out for years. I think Ambac including this stuff in its income statement is just scrambling for any reason to pad it in the positive.