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Investing

MBIA (MBI) And Ackman: Killing The Messenger

Photo of Douglas A. McIntyre
By Douglas A. McIntyre Updated Published
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MbiaMBIA’s (MBI) corporate slogan "Wisdom In Action" presents a monumental irony. Management’s gamble that derivatives were a good way to pop earnings nearly ruined the company. The firm was, after all, supposed to be the safest business in town, insuring municipal bonds meant to do things like build schools.

The people who run MBIA have decided to blame the misdeeds on their watch on someone else, a handy tool employed by executives everywhere.

Hedge fund manager Bill Ackman has seen MBIA for what it was, an insurance operator that took on too much risk. He has been short the stock for some time, and vocal about how badly MBIA has been run. Now the company is talking about suing Ackman as a means of punishing him for his opinions and his intelligent observation that MBIA shares would fall.

According to The New York Post, MBIA is "assessing all our options, including litigation" against Ackman’s Pershing Square Capital Management LP, Chief Executive Officer Jay Brown said on a conference call yesterday.

Short sellers are often viewed as the most wicked people in the financial community, building their businesses on rumors and unnecessarily negative characterizations of the prospects of the companies they short. If that is true, Ackman’s campaign against MBIA is novel because its premise has been true.

Douglas A. McIntyre

Contact [email protected] for any questions or corrections.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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