- The Richest Members of the US Congress
- New Consensus Sees Stimulus Package as Worthy Step
- Wall Street Jobs Slow to Return Despite Record Profits
- Thanksgiving Week Stuffed With Economic News
- Black Friday Deals May Not Signal Retail Comeback
- Investors to Goldman: Be Less Greedy
- UPS Sets New Rates For 2010
- Victoria's Secret Hopes to Rekindle Desire for Lingerie
- 'New Moon' Takes Record $72.7M Box Office Bite
- How Stock Investors Can Play Holiday Travel
- Time Lapse World Series Is A Great Play
- Hirschhorn: Greed...or Fear
- My Top 10 Tech Toys for the Holidays
- iPhone a Better Gaming Platform Than Android?
- May Day For Dendreon
- 100% Mortgage Financing From USDA
- Holiday Tipping: Who And How Much
- Deep Discounts Should Make It a Very Tech-y Holiday
Text Size 
William Ackman, a hedge fund manager and short-seller of MBIA, is submitting data to the Securities and Exchange Commission and insurance regulators in New York State alleging that bond insurers MBIA and Ambac Financial Group are understating their losses.
In his report, Ackman, of Pershing Square Capital, will contend that both bond insurers have said their mark-to-market losses are less than $1.5 billion, but according to his analysis, the losses for each firm will be around $12 billion.
Ackman has come up with this number through an analysis of the vast majority of the CDOs that have been insured by the company. He will claim that his analysis is conservative, meaning that if there is a question about a particular CDO, he doesn’t assume a worst case scenario.
CNBC has confirmed that Ackman has recently met with investor Wilbur Ross to discuss Ross’ examination of Ambac [ABK
Loading...
()
]. Ross is interested in buying one of the troubled insurers rather than starting one of his own.
Sources say Ross is hesitant to put more than $1 billion into Ambac, so if Ackman is right, it might end Ross' interest in the bond insurer.
Wilbur Ross has declined to comment.
Ackman is a short seller and has a short position on MBIA [MBI
Loading...
()
]. He would like to drive the bond insurer stocks down to zero, where he thinks they belong.
Wall Street bond rating agencies were already poised to downgrade Ambac and MBIA, even though New York state insurance regulators wanted to get a postponement until the state could develop a bailout package.
Losing a Triple A rating could be devastating for the bond insurers, preventing them from drumming up new clients -- and possibly forcing them out of business.
However, if MBIA and Ambac’s losses are as large as Ackman suggests, the rating agencies will have no choice but to downgrade them. That could then scare potential investors away from a private market bailout of the bond insurers, as well as make the New York State bailout plan much more difficult.
Ambac has already received a downgrade from rating agency Fitch but has so far been spared by Standard & Poor’s and Moody’s. MBIA hasn't yet been downgraded.
Print
Email
- Technology can make or break a fortune in the world of alternative energy.
- Many people are facing the holidays with substantially smaller incomes. Here’s how some are adapting.
- Jim Cramer is a proponent of stocks that pay healthy dividends, and here are his top five dividend plays.
- From salt, to lip balm to envelopes, it turns out that bacon flavoring can sell almost anything.
- The homebuyer's tax credit jacked sales for a while, but 2010 is looking weak. Now what?
- CNBC’s technology reporter Jim Goldman guides you through the best gadgets to buy this holiday season.
Data is a real-time snapshot *Data is delayed at least 15 minutes