Professor Elam

I thought you might find this letter to the shareholders of MBIA, a large bond insurer and credit default swap guarantor, interesting. Seems Moody’s and S & P maintain their AAA rating on both MBIA and AMBAC.

Now click on the chart thru March 20 and take a look. Does this look like a AAA company to you?  Clearly the market does not think so!  Have accountants valued the ‘assets’ on their balance sheet along with their liabilities correctly?  Either Moodys or the market is wrong, which would you guess is right?  We will be studying the equity side of the balance sheet in coming weeks in Intermed II.  A = L + OE assuming A and L are correct!