Monday, March 10, 2008

MBIA - More Games

If you haven't been following this whole thing, last week MBIA asked Fitch to withdraw its ratings of MBIA. They had their excuses seen below but basically they don't like the fact the MBIA isn't walking to the same beat as the other rating agencies. (They are walking pretty close and still being way to easy, they are just raising a few more issues)

http://www.marketwatch.com/news/story/mbia-fitch-ratings-process-different/story.aspx?guid=%7B5DE10C90-FF19-4B7E-86FB-2865C135E042%7D&siteid=rss

So Fitch responds here calling their bluff

http://www.marketwatch.com/news/story/fitch-calls-mbia-info-destruction/story.aspx?guid=%7B957F2677%2DAA68%2D4A78%2D9189%2D03A2C5D9537D%7D&dist=hplatest

Since it is not public here is some of the response from Fitch. It was posted on Calculated Risk in one of the notes section.

I am writing in response to your letter to Fitch Ratings delivered to us this past Friday requesting that we withdraw MBIA's Insurer Financial Strength (IFS) rating, but maintain MBIA's debt ratings.

Regarding the commercial relationship between MBIA and Fitch, as I suggested to you in our meeting on Friday, we are empathetic to the financial and operational stress MBIA is presently undergoing and are aware of the significant cost containment measures you are initiating. We are, therefore, willing to continue our ratings without charge to MBIA. I assume, in the interest of your stakeholders, that you will be seeking and will receive equal concessions and/or sizable fee reductions from both S&P and Moody's.

In addition, I would like clarification of your intentions regarding cooperation with our rating process. You stated in your March 7 press release, and in your letter to us of the same date, that you would like us to withdraw our IFS ratings, but continue rating MBIA's debt securities. Separately, by email sent a day later on March 8 (a copy of which is attached hereto) you requested that we return or destroy key portfolio information and discontinue all use of that information in proceeding with our rating analysis. It seems disingenuous at best to assert in your letter to investors published yesterday, March 9 (footnote 1), that you "intend to work with Fitch to perform the analysis needed to rate [MBIA's] debt securities", while privately demanding return of the portfolio information and materials that you freely provided to support our ratings and that of other rating agencies for many years.

It would appear that rather than "work with Fitch" your intention could be to emasculate our opinion by withholding information and subsequently discredit our opinion as being uninformed.

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