MBIA "Questions" 2007 Preliminary Reports, Plans to Split, Pause in ABS

A bit late to this item, which appeared on Bloomberg. Remarkaby, their headline does not mention the most newsworthy item, which is the possible recanting of the preliminary earnings announcement. At a minimum, this would seem to raise questiona about the quality of controls. The decision to stop writing asset-backed securities guarantees for six months also seems odd. Many observers have been under the impression, per the use of the “good bank/bad bank” model, that the ABS business would be put in runoff mode. But now the plan to split also seems less imminent.

Wonder if Standard & Poor’s was advised of this issue before they reaffirmed the bond insurer’s AAA. From Bloomberg:

MBIA Inc., seeking to stave off a crippling credit rating downgrade, will stop writing guarantees on asset-backed securities for six months and will separate that business from its municipal unit within five years.

Chief Executive Officer Jay Brown also said he has “questions” about the company’s 2007 preliminary results released last month and hasn’t yet signed off on the statements, according to a letter to shareholders today.