There is no end to alternatives, it seems, to keeping or putting Municipal Bond Insurance Policies at risk. The problem comes from some Bond Insurance Companies needing to raise capital to keep their AAA credit ratings. (They gleefully undertook obligations to guarantee Collateralized Debt Obligations and other subprime nightmares and as a consequence have hurt a lot of Municipalities and Counties and Hospitals and Schools and others who issue Bonds. Do they think this is "Collateralized Damage", do you suppose?)
Another alternative that can be pursued, beyond the endless number of alternatives already posted in this space, for example, is to raise the capital demanded by the credit raters by selling stock. For example, Ambac used to be a large Bond Insurance Company. Ambac recently issued cash bonuses of $800,000.00 and up to the people who brought the company where it is today. Now, Ambac is reportedly trying the tack of selling stock to raise money, as reported at Bloomberg.com on Thursday, March 6, 2008 and on Wed., March 5, 2008.
The idea of selling shares is appealing to MGIC, reportedly the largest Mortgage Insurance Company in the United States. MGIC and the second-largest Mortgage Insurance Company, PMI, have also reportedly announced their future intentions "to scale back coverage on riskier home loans." The report does not provide any more clarity to that quote. MGIC announced a terrible 4Q 2007, while PMI has managed to delay filing its 4Q 2007 financial reports on the ground that it is waiting for more bad news from another Municipal Bond Insurance Company, FGIC -- of which PMI is an owner. Andrew Frye, "MGIC Plans Stock Sale to Bolster Mortgage Insurance (Update 3)" (Bloomberg.com, Tuesday, March 4, 2008).
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