Another big bond insurer in trouble

From Bloomberg:

"Jan. 30 (Bloomberg) -- Financial Guaranty Insurance Co., the world's fourth-largest bond insurer, lost its AAA credit rating at Fitch Ratings after missing a deadline to raise capital.

Financial Guaranty, a unit of New York-based FGIC Corp., was cut two levels to AA, New York-based Fitch said today in a statement. The company had been AAA since at least 1991. Moody's Investors Service and Standard & Poor's are also reevaluating their ratings."

Instead of the Fed cutting rates, and the Government and Treasury Dept. coming up with some half baked "stimulus" package, they just should have put a trillion aside to save these bond insurers. Other people can buy up the bank shares - but who has got the money to save these bond insurers? The panic is not going to stop, and the credit markets are not going to function until all this worthless paper is exposed.

Wall St off high on CNBC bond insurer report

So Charles Gasparino ruined the party! Just when the market got another rate cut, and was up 100 points, he had to bring up something that was known yesterday:

"NEW YORK, Jan 30 (Reuters) - U.S. stocks pared gains in late trading on Wednesday after CNBC reporter Charles Gasparino said he believed that ratings agencies may downgrade bond insurers MBIA and AMBAC Financial Group Inc. as early as today."

Face it - these bond insurers are bankrupt. The paper is worthless - the model was bullshit. This is a trillion dollars worth of stuff here we are talking about. The bulls tried today, but this news wasn't the reason the market sold off late, it was just an excuse.

Update: Calculated Risk has more.