MOST SHARED
- Citigroup Lost $20 Million on Facebook IPO Trades
- Spanish Lender Seeks 19 Billion Euros; Ratings Cut on 5 Banks
- Astronauts Snare SpaceX Rocket
- Carl Icahn Increases Stake in Chesapeake, Demands Board Seats
- Marc Faber: 100% Chance of Global Recession
- The Key to a Successful Turnaround
- Your First Move For Tuesday May 29th
- Oil Declines, but Doesn't Help European Consumers
- Senate Summons Dimon to 'Get to the Bottom' of JPM Mess
- Kansas City Fed President Steps Into Jamie Dimon Debate
- Facebook Fiasco: 10 Things Underwriters Got Wrong
- Sticker Shock: What College Is Likely to Cost in 18 Years
- Week Ahead: Europe Has Wall Street Bull on Short Leash
- What Happened to Stocks? Most Unloved in 50 Years
- Icahn Raises Stake in Chesapeake, Wants Board Seats
- Citigroup Lost $20 Million on Facebook IPO Trades
- Break Up JPMorgan: Sheila Bair
- Main Players in the Greek Election
- Many Greeks Moved Their Money Abroad Long Ago
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
MBIA, Ambac Understate Losses: Short Seller
Text Size 
On-Air Editor
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.
- The Nasdaq has suffered the most from the EU crisis showing there's risk in the usual tech stocks.
- Targeting more Millennials is just one of the items brewing for consumers in the world of spirits.
- It seems many people may need a reminder of how NOT to act on a plane. Here are a few tips.
- Here are some very unusual roadside stops along American highways that might peek your interest.
- How three generations of Americans are dealing with the finances of retirement.
Data is a real-time snapshot *Data is delayed at least 15 minutes
