MBIA Dismisses Ackman: Got A Better Idea?

MBIA (MBI) immediately dismissed Bill Ackman’s plan for them yesterday after barely a cursory view.

“Like Mr. Ackman’s open-source model, his statements in the media and the barrage of letters he has sent to regulators and the rating agencies — which contain half truths, innuendo and faulty analysis — this proposal is simply a continuation of Mr. Ackman’s campaign to profit from his short positions and credit default swaps in the bond insurance industry,” MBIA said.

“Our preference, like the regulators, continues to be finding a solution that would be in the best interest of all policyholders,” MBIA said.

Here is where the hypocrisy comes in. In the Wall St. Journal MBIA indicated it agrees with a spokesman for the New York insurance department who said Mr. Ackman’s proposal would split the company and likely lead to a substantial downgrade for the structured side.

Splitting bond insurers into two sectors — one focused on lower-risk municipal bonds and another to handle higher-risk collateralized debt obligations — allows shareholders of the lower-risk holding company to benefit while holders of the CDOs suffer.

Thus the dismissal of Ackmans plan. It should be noted this was probably done before it was read but that is another issue.

Here is the rub. Later is the same article it is noted that MBIA Chief Executive Joseph W. Brown Jr, upon returning to the the CEO post, vowed to work with regulators to restore confidence in the company. He also said he would consider splitting the company.

Now, on one hand we have the company coming out and dismissing Ackman because his proposal would spit the company then we have the CEO coming out and saying he would consider that very split idea.

The bottom line is they have no plan. What they are waiting for is a State or Federal bailout. They have been “talking” to insurance regulators for months now and nothing has been forthcoming from them. There has been no plan, only stonewalling.

They have dismissed plans from Berkshire Hathaway’s (BRK.A) Warren Buffett and now Bill Ackman. Wilbur Ross has stated he was interested in investing in them but talks with management have gone nowhere.

Here is the thing. Ackman, Buffett and Ross are all self made billionaires (maybe not yet for Ackman) and all are obviously smarter than those in charge of the now failing bond insurers. The fact that they cannot get anywhere with management ought to be a sign… a bad one..

Disclosure (“none” means no position): None

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