Why I hate Mbia

So what does mbia do? Well basically there an insurance company that reinsures bonds, of *supposedly* riskier businesses, and use their own high credit rating for those bonds. The result is a cheaper bond for the companies issuing debt, and a bond that people who want safe bonds can buy. For more information go to http://en.wikipedia.org/wiki/Monoline_insurance .

Ok first off if I'm here, talking about a bad company, and spending the time to create a blog about why i think its a crappy company, then you know its a crappy company. Heres why I hate it. Ok this business is the business of insuring large amount of bonds, based on a really small company. Mbia insures hundreds of billions of dollar of bonds. and if those bonds go into default, which means that the people who issue those bonds cant pay the interest on them, mbia has to pay them off. So a company with less then 7 percent of the capital needed to cover the outstanding bonds covered, is supposedly a reliable and sustainable business. Unfortunately for mbia they insured of all things housing debt. If you haven't heard about it, the united states is going through the worst recession in housing they have ever seen. The people in the business the longest, like Robert toll, calls it a depression http://biz.yahoo.com/ap/080604/toll_brothers_housing.html?.v=4. So now mbia is stuck with billions in losses. that's not the end of it. This company doesn't keep their promises, and they at worst lie. They made promises to send 900 million to their insurance company. if you don't know they structure their business into a holding company and insurance business. That's tied together intricately. Since last January they promised to send the money. And as of last week they promised, and they backfired. The promises to note holders, clients, rating agencies, and regulators broken. so their liars. there is no real reason why there keeping the money. They say their insurance company is adequately funded. So no need to send it. If its adequately funded why not send the money, it wont hurt. The reason is that once that money is in there it has to be used for their clients, and not management mismanagement. Now management wants to start a new insurance company. Ok first off if I were NY regulator's would I allow a company and management that has mislead them over and over again, and willing to leave clients to the wind start another company and even allow them to get the licences, I would revoke them and not allow them in the country. it would be at worst a pr nightmare, and at best idiocy. Brown is in a dream land on that. I have no idea what he is thinking about. Ok and then another option is that he wants to use that money for a dividend. OK if I were a cynic, I would be thinking he just wants to bail out his stock positions, since he sunk allot of his money into the company. I doubt the people he raised the money from would allow it, and I doubt regulators would feel that would be wise, and would rush in to shut down the insurance arm. Same idea for a buyback. If I were NY insurance regulators, the ratings agencies like Moody's, s p , and Fitch i would be going, is management worrying about their own stock, or are they are worrying about their insurance company and clients. And to brown's idea, his first fiduciary duty as a insurer is to his clients. if not, then he should allow the NY regs to take over, b/c he is not fit for the job. http://www.bloomberg.com/apps/news?pid=20601087&sid=ahFoFpIPL0B4&refer=home