Yeah, if all this stuff is really happening, there's going to be some major short
covering.

From briefing.com:

"CNBC commentator reports that a source has told him that 8 banks have formed a consortium
to seek rescue plan for bond insurers
Source says that the consortium of banks includes: RBS, SocGen, Wachovia, BNP Paribas,
Barclays, Dresnder, UBS and Citigroup. (ABK, MBI)"

Shorts won't like this

Dude this market is absolutely controlled by these insurers right now. Did you see
everything get drilled right as the FGIC downgrade came out? You wanna gauge
bullishness/bearishness in the market... watch the reactions to the insurers news.

Great work. Thanks

Bond Insurers have been absolutely crushed by the credit crisis. The two industry leaders
Ambac and MBIA have both lost more than 80% of their market value in just over a year.
These bond insurers are only as good as their credit rating because, in order to provide
insurance bonds, they must keep their AAA credit rating. There has been much speculation
that these companies are so heavily influenced by the credit market that the rating
agencies could drop their ratings, which would be akin to a death sentence. It would not
only have affected MBIA but also the $678 billion of securities they insure.

Today, MBIA’s CEO, Gary Dunton spent a four hour conference call squelching rumors that
recent write-downs have crippled the company so much that they would lose their AAA
rating. MBIA did disclose that the 4th quarter produced a massive $2.3 billion write-down.
There were fears that MBIA would not have enough capital to cover their losses. “The
effect of these reserving and impairment activities on our capital position will be more
than offset by the successful completion of our capital plan, which will increase our
capital position by well over $2 billion,” said Gary Dunton in a statement. MBIA
aggressively looked to raise capital in order to maintain its strong Moody’s rating.

The company raised $1 billion dollars through offer of surplus notes. In addition, MBIA
also brought in a huge investment through a private placement, possibly one of the largest
private placements ever. The transaction was negotiated by private equity firm Warburg
Pincus, who will purchase newly issued MBIA shares with $500 million right away with an
additional $500 million likely in the future. This type of transaction is often referred
to as a PIPE or Private Investment in Public Equity. The great advantage of these
transactions is that they are quickly executable and generally not very expensive. PIPE
investments are becoming more and more prevalent in the post Sarbanes-Oxley marketplace as
a way to simplify the act of raising capital.

It appears that MBIA’s chairman was able to assuage investor’s fears today as shares
were up almost 7% today with the help of the two large investments. MBIA has a very strong
Ockham rating at present, but that is a factor of their steep decline over the last year
which make the shares seem cheap in a historical context. However, there is still plenty
of uncertainty in the credit market and Ockham cannot advise going long on monoline
insurers until there is a more stable market climate, which may take a good while.