And it’s not just the fact of MBIA’s triple-A rating that drives Mr. Ackman batty; it’s its transcendent importance to the company’s business. As Gary. Following New York and U.S. probes of his trading and reports, Ackman persisted in challenging MBIA’s AAA credit rating for more than five. That AAA rating being essential to MBIA staying afloat as a bond insurer. Later on Thursday, Bill Ackman, of Pershing Square – the massively.

Author: Fenrikora Garan
Country: Russian Federation
Language: English (Spanish)
Genre: Love
Published (Last): 8 August 2006
Pages: 20
PDF File Size: 11.90 Mb
ePub File Size: 5.99 Mb
ISBN: 722-4-27684-191-3
Downloads: 39315
Price: Free* [*Free Regsitration Required]
Uploader: Zologul

We believe that the bond insurers and the rating agencies do not adequately consider the facts that: The independent research firm CreditSights Inc.

Whitman’s firm owned more than 10 percent of MBIA’s stock, he said in the interview. Trump didn’t respond to a request for comment. The publicly traded stock of Ram Holdings Ltd. He also found a reinsurance transaction that allowed the company to downplay a loss.

Ackman’s Letter to Moody’s: A Must Read –

The two never agreed to work together. Following New York and U.

Your updated rating assessments should be adjusted to exclude tax benefits in your calculation of capital adequacy 2 Covenant Violations and Loss of Access to Liquidity Facilities As a result of recent losses, both MBIA and Ambac have triggered covenant violations on their liquidity facilities.

National Public Finance Guarantee to A3″. Marty Whitman can call him what he wants, but the guy knows his stuff. Financial insurance or Financial Guarantees are a form of credit enhancement. Views Read Edit View history. In the MBIA documents, Ackman says he saw that the insurer was guaranteeing untested asset-backed securities.

Can this possibly make sense? Because the holding companies typically provide indemnities for employees and directors, we would expect that directors would be loathe to allow liquidity to leave the holding company estate, depriving directors and employees of the resources to protect themselves from claims.

Ackman’s Letter to Moody’s: A Must Read

You should adjust your estimate of CPR for each insurer to reflect the above factors in order to accurately establish the capital available to pay claims. By using this site, you agree to the Terms of Use and Privacy Policy. Gotham made a profit selling a stake in the property to Goldman, Ackman says.


People are obsessive about stupid things. He posted a list of the securities the two companies guaranteed on the Internet, along with a model supplied by an unnamed investment bank, so investors could do their own forecasts of what the insurers might lose. Insurance claims must be paid in cash. MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities.

The MBIA surplus note issuance is perhaps the clearest example of the failure of the rating agencies to accurately assess the creditworthiness of a bond insurer.

He was charged copying fees for copyingpages of statements regarding the financial services company, in his law firm’s compliance with a subpoena. Ackman says he recently received notification that the SEC had ended its investigation of him without any finding of wrongdoing. Various MTM programs also create liquidity risk as assets may have to be sold to meet redeeming bondholders.

Retrieved from ” https: Ackman may soon be proved right. The combination of volatility in each of these markets and the increased collateral demands required in holding company downgrade scenarios will put a severe strain on holding company liquidity.

Ackman learned in January from a Wall Street Journal reporter that Spitzer was investigating whether Gotham had engaged in manipulative trading on MBIA and other companies and that the newspaper would publish an article the next day.

Ackman peppered rating companies and regulators with letters, e-mails and presentations criticizing MBIA’s credit rating. It was founded in as the Municipal Bond Insurance Association.

MBIA – Wikipedia

We believe a shareholder vote and approved registration statement will likely be required in such a circumstance, delaying the ability to consummate the transaction beyond the March 31st Warburg backstop drop dead date. In addition, bond insurers with substantial investment management or swap operations have additional liquidity needs in the event axkman a downgrade.


When MBIA did, in fact, crash as the financial crisis of came to a head, he sold the swaps for a large profit. Substantially all of these premiums are from structured finance guarantees.

The swaps would rise in value if doubts about MBIA grew. We believe that both MBIA and Ambac have substantial collateral posting obligations in the event of a holding company downgrade.

In the mids, Gotham tried to buy Rockefeller Center. He says his dad called off the wager the morning of the test for fear he would lose the bet, though Ackman ended up scoring wrong on one answer.

He says he plans to give his personal gains on the bond insurers to Pershing Square’s charitable foundation. There is no other financial institution in the world which takes the present value of interest spread income on loans in its portfolio and adds ackmam to its capital. The company went public in A consortium of insurance companies AetnaFireman’s FundTravelersCignaand Continental formed the Municipal Bond Insurance Association in to diversify their holdings in municipal bonds.

They are persistent about important things. Retrieved November 2, Moody’s upgrades the ratings of MBIA group: Call to divide not viable”. There is also no mechanism whereby the bond insurers can borrow against these potential future premiums to be used to pay claims in the present day. This is bmia facie evidence that your ratings of MBIA are overstated. The transaction covered MBIA for losses related to the bankruptcy of a Pennsylvania hospital group. Each of you, according to your recent public statements, is in various stages of updating your ratings of the bond insurers.

This page was last edited on 1 Julyat