Credit Crunch: A 'Simple' Bond-Insurance Plan; The Complex Risks of Dividing Businesses to Avert Downgrades
Everyone seems to have a plan to fix the problems of Wall Street's struggling bond insurers.</br></br>From Warren Buffett to state insurance regulators to stock market short sellers, the many rescue plans being floated around for MBIA Inc., Ambac Financial Group Inc. and FGIC Corp. offer variations on a similar theme.</br></br>They want to separate the industry's safer business of insuring municipal bonds from the riskier business of covering securities backed by, among other things, subprime mortgages, in essence splitting the insurers in two, creating one good and one bad.</br></br>Each plan, in turn, is fraught with complications and contradictions.</br></br>The latest to offer up a plan yesterday was hedge-fund manager William Ackman, head of Pershing Square Capital Management LLC, who has long bet against bond insurers and their shareholders.