Bond insurer FGIC, the third-largest insurer of both municipal bonds and structured securities composed of subprime mortgages, was forced to split these two parts of its business after being stripped of its AAA rating by Moody’s and not receiving a government or private bailout.

New York Governor Elliot Spitzer gave all bond insurers 3-5 days to save the profitable municipal bond portfolio of bond insurers and to isolate the heavy losses due to subprime mortgages. Snapshot asks: what will happen to the business of insuring structured securities?

Eric Danillo New York State Insurance Comissioner – Testimony Feb 14, 2008
Financial Times – Bond Insurer FGIC Tells Regulator It will Split
Wall Street Journal – Spitzer Warns Bond Insurers
Bloomberg – Muni Regulators Seek Disclosure on Auction-Rate Bonds
Financial Times – FGIC Downgraded by Moody’s
Bloomberg – Muni Regulators Seek Disclosure on Auction-Rate Bonds