MBIA Tumbles on $8.1 Billion of CDOs, Fitch Warning
Dec. 20 (Bloomberg) -- MBIA Inc. tumbled the most since 1987, and the risk of default soared after the world's biggest bond insurer revealed that it guarantees $8.1 billion of collateralized debt obligations repackaging other CDOs and securities linked to subprime mortgages.Credit-default swaps tied to Armonk, New York-based MBIA's bonds climbed 115 basis points to 595 basis points, the widest on record, according to CMA Datavision in London. MBIA shares plunged $4.73, or 18 percent, to $22.29 as of 9:38 a.m. in New York Stock Exchange composite trading.
MBIA posted a document on its Web site late yesterday showing it insured the so-called CDOs-squared, a potentially riskier form of security than what the company typically guarantees. Rising defaults on subprime mortgages packaged into securities have led to bond downgrades and threatened MBIA's AAA guaranty rating.
``We are shocked management withheld this information for as long as it did,' Ken Zerbe, an analyst with Morgan Stanley in New York, wrote in a report yesterday. ``MBIA simply did not disclose arguably the riskiest parts of its CDO portfolio to investors.'…
Comment: The TOP 10 Major Holders, which is less than 3% of the 354 Institutional Holders, control 64.40% of MBIA. Many of the same Major Holders control Morgan Stanley. So they're "shocked?" This has got to be C.Y.A. at its finest.
SunTrust Injects $1.4 Billion to Protect Money Funds
Dec. 20 (Bloomberg) -- SunTrust Banks Inc. injected $1.4 billion into two of its money-market funds, becoming at least the seventh company to bail out customers from an investment traditionally billed as one the safest.The rescue keeps the Atlanta-based bank's money funds from falling below the $1-a-share promised to investors. Losses caused by a collapse in global credit markets spurred companies including Bank of America Corp. and Wachovia Corp. to bolster money funds so they don't ``break the buck,' which can shake confidence and spur fund withdrawals...
SIV Assets
Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and BlackRock Inc. have formed a ``SuperSIV'' fund to bail out SIVs hurt by the collapse of some credit markets, including those for subprime home mortgages.
Comment: With many of the same Major Holders being involved in each financial company, there's certain to be a lot of money-moving going on behind the scenes to prop up the money-market funds and SIVs of these companies.
Barclays sues Bear Stearns over hedge funds
December 19, 2007 4:51 PM ET
NEW YORK (Reuters) - Barclays Bank Plc on Wednesday accused Bear Stearns Co Inc of using two hedge funds that collapsed last summer as places to unload troubled assets.The London-based bank's allegations appear in a lawsuit filed in U.S. Court for the Southern District of New York in Manhattan.
Bear Stearns was not immediately available for comment.
Barclays described the collapse of two Bear Stearns-run hedge funds as one of the most shocking in the last decade. The bank said it was the sole shareholder to a Bear Stearns enhanced leverage fund with exposure to risky subprime mortgages. That fund and another run by Bear Stearns had more than $20 billion in assets before their collapse…
Comment: Barclays & Associates control over 23% of Bear Stearns. I think this gives new meaning to the phrase "insider trading." Are they suing to get a refund for their own mistakes? What a deal! And due to their inter-connections, I can't help but wonder if Bear Stearns was used as a "toxic waste dump." Bear Stearns: Worst Quarter Ever!
Here's a few more of the mortgage-related companies, and the same Major Holders.
MGIC Investment Corp.
Radian Group Inc.
Ambac Financial Group, Inc.
© 2007 by Edward Ulysses Cate
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