Interest Rate Roundup

Wednesday, December 05, 2007

Moody's and MBIA "tape bomb"

Interesting -- a few minutes ago, shares of the bond insurance firm MBIA took a spill. The broad market pulled back and Treasury bonds caught a bid. Why? Moody's Investors Service is now calling a capital shortfall at MBI "somewhat likely." The firm had been analyzing MBIA's mortgage backed security portfolio. Who knows how this all plays out. But the lesson is clear: The broad market remains vulnerable to "tape bombs" -- out-of-the-blue warnings about financial industry participants caused by ongoing problems in the mortgage market.


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