MBIA’s protestations to the contrary, Fitch feels that MBIA’s “discovery” of an $8.1 bn CDO-squared problem (just after MBIA had had its ratings affirmed) is fraudulent.
Fitch Places 173,022 MBIA-Insured Issues on Rating Watch NegativeNEW YORK–(BUSINESS WIRE)–Concurrent with its related rating announcement earlier today on MBIA Inc. (MBIA) and its financial guaranty subsidiaries, Fitch Ratings has placed 173,022 bond issues (172,860 municipal, 162 non-municipal) insured by MBIA on Rating Watch Negative.
Fitch placed MBIA’s ‘AA’ long-term rating and ‘AAA’ insurer financial strength (IFS) rating on Rating Watch Negative following the rating agency’s updated assessment into MBIA’s current exposure to SF CDOs backed by subprime mortgage collateral and various CDO-squared transactions, as well as MBIA’s exposure to RMBS.
A detailed list of the affected municipal bond issues is available on the Fitch Ratings web site at www.fitchratings.com in the ‘U.S. Public Finance’ sector page under ‘Special Reports’.
This has been quite the charade for a long time now, and the ratings agencies have been strongly pressured to “work with the system,” especially as Paulson, Bernanke et al. have thrown themselves into repealing the business cycle.
However, at some point the ratings agencies are not going to let the monoline industry do to them what Enron did to Arthur Andersen.