BizJournals Portfolio
Aug 11 2008 7:04am EDT

MBIA Turns Thuggish

When it comes to the monolines, I've had quite a lot of sympathy for MBIA in general and for its CEO Jay Brown in particular. But if he carries on like this, that sympathy won't last long:

MBIA Inc. said it may sue Bill Ackman, striking back against the hedge fund manager who waged a six-year campaign against the bond insurer and said this year that the company may be insolvent.
MBIA is "assessing all our options, including litigation" against Ackman's Pershing Square Capital Management LP, Chief Executive Officer Jay Brown said on a conference call today.

Litigation is a very, very, very bad idea. The immediate upside is negligible: what could MBIA hope to achieve from bringing such a case? And the long-term upside isn't much larger: while a handful of people might have second thoughts about publicizing their analysis of MBIA, investors more generally will simply assume that MBIA is trying to prevent them from reading negative analysis, and will mark down MBIA's securities accordingly.

Ackman is tenacious, but he's no criminal, and he doesn't go around threatening the companies he's shorting. Similarly, neither should they threaten him. Open, transparent debate is good; anything which serves to quash that debate is bad. The irony here is that Jay Brown is extremely good in such debates: he's clear and easy to understand and quite convincing, most of the time. He should engage in them more often, rather than resort to thuggish tactics like this.


Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com

Come on, like us—you know you want to.

Follow us and if you're an innovative entrepreneur, we'll return the favor.

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

People & Ideas

Whisky To-Go-Go

Now there's a company that let's you taste your knowledge of fine blended Scotches by mixing a whisky of your own. Read More