The leaders of MBIA are telling Fitch Ratings to take a hike. As you will recall, MBIA used to be the largest Bond Insurance Company in the United States because of its AAA credit rating, which MBIA officials jeopardized when they wandered into unsafe territory and guaranteed risky loans for the chance of high profits in subprime mortgages.
The old AAA credit rating is crucial to MBIA's continued ability to make money as a Bond Insurance Company. Two other rating services, Moody's Investment Service and Standard & Poor's, have come under fire for inexplicably continuing to rate MBIA's credit at AAA in the Bond Insurance field. Fitch did not. Fitch instead required MBIA to come up with more capital to secure MBIA's ability to pay claims before Fitch would continue the AAA credit rating for MBIA.
MBIA's leaders have told Fitch that Fitch should "stop issuing credit ratings on its insurance units." "MBIA, the Bond Insurer, Asks Fitch to Quit Rating Some Units" p. B6, col. 1 "Business Day" Section (Bloomberg News Report published in New York Times Nat'l Ed., Saturday, March 8, 2008).
This sort of stunt is apparently acceptable in a world of corporate arrogance. Countrywide Financial, which used to be a mortgage lender, reportedly rejected two outside consultant groups which recommended against higher compensation for the chair of Countrywide, before Countrywide accepted the recommendation of a third, more enlightened perhaps, group of consultants that understandably enough recommended that the chair receive a raise worth many, many Millions of Dollars. Again, this is not without precedent in the world of corporations in the U.S. in 2008. See generally Jenny Anderson, "3 Executives Under Fire on Exit Pay" p. B1, col. 6 "Business Day" Section (New York Times Nat'l Ed., Saturday, March 8, 2008); Jonathan Peterson, "Compensation/Mozilo Defends Cashing in Countrywide Stock" (Los Angeles Times Online, Saturday, March 8, 2008).
It is also reported that Countrywide is one of many past and present lending institutions that are under investigation for possible criminal activities and schemes in their mortgage lending practices. Law enforcement agencies ranging from the Federal Bureau Investigation to State agencies in Connecticut, Illinois, Massachusetts, New York and Ohio are looking at the activities of lenders in the so-called "mortgage industry." Raymond Hernandez, "Countrywide Said to be Subject of Federal Criminal Inquiry" p. 17, col. 1 (Sunday New York Times Nat'l Ed., March 9, 2008).
Pride goeth before a fall, some folks say.
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