Reply #55: Monolines given five days to find funds

[Ghost Dog]

Eliot Spitzer, New York governor, gave bond insurers three to five business days to find fresh capital, or face a potential break-up by state regulators who want to safeguard the municipal bond markets.

Mr Spitzer's warning came shortly before Moody's Investors Service highlighted concerns about the bond insurers by withdrawing its triple-A credit rating for privately held Financial Guaranty Insurance Company.

However, the sting of Moody's downgrade was mitigated by its more positive comments about MBIA (NYSE:MBI) and Ambac, the two largest bond insurers, which helped send their shares up 8.4 per cent and 12.4 per cent, respectively, in New York trading.

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