MBIA is blogging! Or something very similar, in any event. The company has put up a 2,000-word response to this morning’s NYT article – the one which I was so skeptical about earlier. It’s entitled "New York Times Story Is Inaccurate and Misleading," which pretty much sets the tone.

According to MBIA, and frankly I trust them more than I trust the NYT on this,

  • There was no "promise to shore up a crucial unit with $900 million in capital," as the NYT asserts.
  • The assertion that CDS holders can accelerate their obligations if MBIA is taken over by the regulator is also false: MBIA would need to go bankrupt or insolvent before that even became a possibility.
  • The assertion that NY insurance regulator Eric Dinallo is worried about "this threat" is also false: Dinallo has stated repeatedly that he is not worried about MBIA’s solvency.
  • Josh Rosner is full of crap. Oh, sorry, that’s my wording. MBIA is more polite: "Everything Mr. Brown has said publicly runs contrary to Rosner’s conjecture," is how they put it.
  • MBIA does not insure $230 billion in MBS, it insures just $69 billion. And the losses on those MBS contracts aren’t "rising"; to the contrary, "the Company does not anticipate material additional impairment for these exposures in the foreseeable future".

Good on MBIA for going public with all this, and not being scared to attack the journalists directly:

All these facts stated above have been a part of the public record through various and widely noticed letters and statements from the company. We also provided lengthy background to the reporters on the story in recent days. We believe that ignoring key facts – in favor of speculation and error – is simply irresponsible and we would suggest that readers regard this story as incomplete and unreliable.

The irony, of course, is that even if a highly-regulated financial institution like MBIA is OK with public debate, the NYT itself is not.

There’s precisely zero chance that the NYT will respond in public to this letter; instead it will keep its article up, uncorrected, and preserve as much as it can its aura of infallibility. The paper is happy to throw the first punch, but then it stops. So although the last word will go to MBIA, most readers of the Times will never know that.

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