Thursday, January 31, 2008

Ambac and MBIA: "It's hard to fill a bucket with a hole at the bottom"

William Ackman, the activist shorter of the monolines, has stepped up his one-man campaign to bring the beleaguered insurers down.

He claims he has obtained the most detailed yet data on Ambac and MBIA’s exposure to CDOs, and has bunged it all onto an “open source” website for others to add to.

In an accompanying letter, which you can view here, sent to Eric Dinallo, the SEC and cc-ed (as you do) to Ben Bernanke and the US Senate, Ackman said the data - obtained from an anonymous bank - would mark “a departure from relying on the opaque, faith-based pronouncements that the bond insurance industry has promulgated to the marketplace.”

The hedge fund manager, who took short positions on the monolines back in 2002, says people should feel free to use the data to make their own loss estimates. His own sums leave MBIA and Ambac facing around $11.6 billion of losses apiece on their RMBS and ABS CDO net exposures.

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