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Shaken and stirred brings us this week’s Marketplace Money Buzzword: Bond Insurers.
They’re institutions with impeccable credit. When cities have bad credit, bond insurers can get them good insurance rates… for a fee. But in the last few years, they backed securities that gambled in subprime loans.
Hmm, guess what happened? Top bond insurer MBIA lost more than $2 billion in the fourth quarter. Its stock price is down 50 percent since January 1.
But the company’s CEO says it has plenty of capital to keep its license to lend. According to him, MBIA will die another day.
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