Comments on: Fitch Downgrades MBIA to AA http://www.nakedcapitalism.com/2008/04/fitch-downgrades-mbia-to-aa.html Sat, 21 Nov 2009 22:38:01 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/04/fitch-downgrades-mbia-to-aa.html#comment-6424 Anonymous Sat, 05 Apr 2008 21:13:00 +0000 http://www.nakedcapitalism.com/2008/04/fitch-downgrades-mbia-to-aa/#comment-6424 MORAL HAZARD AND THE RATINGS AGENCIES<br/><br/>If the Fed is going to bail everyone out, why should the ratings agencies worry about downgrading the monolines? Perhaps post Bear downgrading MBIA will be easier, since the Fed will take care of any mess it creates. File this under the heading "unintended consequences" of bailouts. MORAL HAZARD AND THE RATINGS AGENCIES

If the Fed is going to bail everyone out, why should the ratings agencies worry about downgrading the monolines? Perhaps post Bear downgrading MBIA will be easier, since the Fed will take care of any mess it creates. File this under the heading “unintended consequences” of bailouts.

]]> By: Max http://www.nakedcapitalism.com/2008/04/fitch-downgrades-mbia-to-aa.html#comment-6408 Max Sat, 05 Apr 2008 08:35:00 +0000 http://www.nakedcapitalism.com/2008/04/fitch-downgrades-mbia-to-aa/#comment-6408 Bond "insurance", especially if the insured bonds are of a homogenous set, like munis, is a ridiculous concept, mathematically. How can it possibly add value? More states, like California, are waking up to the fact that it's a scam. Give it a few more years and the names MBIA and Ambac won't be ever mentioned again.<br/><br/>When California munis auctioned their bonds a month ago, without any stinking MBIA and Ambac leeches, the bids were as high as they have ever been, and munis got a good deal on the interest. Bond “insurance”, especially if the insured bonds are of a homogenous set, like munis, is a ridiculous concept, mathematically. How can it possibly add value? More states, like California, are waking up to the fact that it’s a scam. Give it a few more years and the names MBIA and Ambac won’t be ever mentioned again.

When California munis auctioned their bonds a month ago, without any stinking MBIA and Ambac leeches, the bids were as high as they have ever been, and munis got a good deal on the interest.

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