[Cid_Yama]

<b>Fitch Cuts FGIC, Subsidiary Ratings</b>

Fitch Ratings on Wednesday cut the debt ratings of FGIC Corp. and its subsidiaries following a review of the bond insurance company's finances.
The move affects bond-insurance subsidiaries Financial Guaranty Insurance Company's and FGIC UK's insurer financial strength ratings, which were cut to "BBB" from "AA," the second-lowest investment grade.

FGIC Corp.'s long-term issuer rating was also lowered, to "BB" from "A," pushing the rating into "junk" status.

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<b>FGIC: mortgage losses exceed legal limits</b>

Bond insurer FGIC Corp said on Wednesday that its exposure to mortgage losses exceeded legal risk limits and it may raise loss reserves due to litigation related to stricken German bank IKB.

FGIC, the parent of bond insurer Financial Guaranty Insurance Co, earlier this month filed a lawsuit accusing German state-owned IKB of fraud in providing incomplete information on $1.9 billion of debt that FGIC agreed to insure.

FGIC in a statement also said it has a substantially reduced capital and surplus position through December 31. As a result, insured exposures exceeded risk limits required by New York state insurance law, the New York-based company said.

"This is a bombshell," said Rob Haines, senior insurance analyst at CreditSights in New York. "They are actually in violation of New York insurance law. If they don't remediate this, the state has the ability to take control of the company."

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[Cid_Yama]

I guess the moderator didn't understand the implications of a Bond insurer going belly-up and dumped this in the trash bin of open discussion. Mr. Bill would have been able to explain it to them, if they had just left it alone. This could be the beginning of the end for the financial system.

[IslandCrow]

$this->bbcode_second_pass_quote('Cid_Yama', 'T')his could be the beginning of the end for the financial system.