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Mbia Fires Back At Ackman

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by Felix Salmon
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Feb 14 2008 12:00am EDT

MBIA Fires Back at Ackman

As Congress holds hearings on bond insurers, it's worth reading MBIA's official response to Bill Ackman. There's nothing in there about "the unscrupulous and dangerous market manipulation of short-sellers," as Herb Greenberg feared. Rather, it's a pretty sober analysis, which seems to have convinced Alea, at least. Here's one juicy bit:

Mr. Ackman has been consistent in his suggestion that his estimates of loss are more accurate than the company's. He alleged, in his 2002 attack on the company, that our portfolio subject to FAS 133 would have $2 -- $3 billion of losses. That portfolio, which has largely amortized or been prepaid at this time, experienced no loss. We don't believe there's any basis for giving his current estimates any more credibility than those from 6 years ago.

I don't have a dog in this race, I'm actually quite happy to watch the grenades being lobbed back and forth. But for the time being at least MBIA retains its triple-A rating and is trading at more than $12 a share, up from a low of just $6.75 (but down from a 52-week high of $72.38). I think it would be premature to count out MBIA quite yet.

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