Monoline bond insurers need $200 billion to retain AAA credit rating

According to Egan Jones, the 4th largest credit rating agency in the US. Unlike the other rating agencies, Egan Jones is paid by money managers and not by the companies whose bonds it rates. Egan Jones has already downgraded MBIA [[mbi]] 13 notches below AAA.

Independent studies I have seen indicate that Egan Jones is generally faster and more accurate than S&P, Moody’s, and Fitch. If Egan Jones is right in this case, any planned bailout will fail and the monoline bond insurers will be bankrupt in under a year.

Disclosure: I have no relationship with Egan Jones and no position, long or short, in any bond insurer mentioned, although I do own shares of Berkshire Hathaway, which has recently started a competing bond insurer. I have an iron-clad disclosure policy that has a AAAAA rating (or its equivalent) from Fitch, Moody’s, Egan Jones, S&P, A.M. Best, and The Slovenian Institute for Rating Blog Disclosure Policies.

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