More misery at Ambac, MBIA
Shares of bond insurers Ambac (ABK) and MBIA (MBI) sank in afternoon trading Wednesday after CNBC reported short-seller Bill Ackman of Pershing Square may soon issue another report questioning the companies’ prospects. The news comes as regulators led by New York insurance superintendent Eric Dinallo are trying to put together a plan to recapitalize the bond insurers. The regulators hope to fend off a ratings downgrade that could lead to another round of costly writedowns at big banks. But skepticism about the bailout plan has been rising, as analysts and investors increasingly doubt whether a downgrade can be avoided - and whether the insurers can survive hefty losses on mortgage-related securities. The plunge in the value of the bond insurers’ shares has made vulture investors leery of jumping in, though steel magnate Wilbur Ross is reportedly kicking the tires at Ambac. That news recently got Fortune’s Roddy Boyd wondering what Ross could possibly be thinking - though in fairness, that’s a question that might be asked of just about every financial industry executive about now.
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