Regulators Beg Buffett To Get Into Bond Insurance

Perhaps the fact that Berkshire Hathaway (BRK.A) got into the bond insurance business just as it was falling apart was not entirely due to the genius of Warren Buffett. According to the FT, Mr. Buffett’s company began its new business "just weeks after receiving an unusual call from New York state’s insurance regulator urging it to enter the multi-billion dollar market."

The entreaties of the troubled fell upon the ears of the mighty. New York State approved the application to start the business in one month. People who are not Warren Buffett often wait six to nine months.

Now that Buffett and Company and their Fort Know balance sheet are in the bond insurance business, companies like MBIA (MBI) and Ambac (ABK) can head down the sewer. The stocks of both firms were shellacked today on concerns that they will have substantial losses. Both companies face having to raise money, or worse.

For Warren Buffett, it is good to be the King.

Douglas A. McIntyre