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Banking, finance, and taxes

MBIA (MBI) and Ambac (ABK) May Lose Inflated Credit Ratings

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By Douglas A. McIntyre Published
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Anyone who does not think that insurance regulators have done what they can to keep credit ratings high at Ambac (ABK) and MBIA (MBI) is a chump. With their tremendous losses and risk in their portfolios going forward, only a fool would rate them "Aaa"

The game could only last so long. According to Bloomberg. “meaningfully” higher losses on home-equity loans and collateralized debt obligations than anticipated, raising concern about their Aaa status, Moody’s Investors Service said.

So, why have the ratings agencies held back? To help protect against another huge round of write-downs at big banks. The news service adds "Banks also faced losses of $70 billion on the asset-backed debt, according to Oppenheimer & Co. analysts."

That means that downgrades to the muni-bond insurance companies could lead to the need for banks to raise more capital. That, in turn, will hammer shareholders in the institutions.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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